For now, insurer's big hike on hold

Article Courtesy of The St. Petersburg Times

Published  October 20, 2006

More than 46,000 Tampa Bay residents whose homes are insured by Nationwide got a temporary reprieve Wednesday when state regulators denied the company's request for a 71.5 percent average statewide rate increase.

Pinellas County customers could benefit the most. If the request had been approved, rates in parts of the county could have risen as much as 188 percent.

But if other recent rejections are a barometer, Nationwide's eventual rate increase will still be substantial.

Earlier this year, after State Farm's initial request for a 79 percent statewide increase was denied, regulators later approved a 52.7 percent increase.

Nationwide is now left with three options: It can resubmit its filing, petition for a hearing or seek arbitration.

The primary reasons the insurer, based in Columbus, Ohio, cited for the increase were higher reinsurance costs, rising costs of building materials, and future predicted losses. "The rate request reflects the cost of doing business in Florida," said Nationwide spokesman Joe Case.

But the Florida Office of Insurance Regulation, or OIR, found there was insufficient support in the filing to justify the report.

"The filing contains proposed hurricane rate hikes in excess of 400 percent for some territories," said Insurance Commissioner Kevin McCarty, "which are entirely unsustainable."

The request was also questioned by the state Office of the Insurance Consumer Advocate, which had suggested a 19.9 percent statewide increase. The office pointed out Nationwide buys reinsurance from its parent company and planned an "unusually large" underwriting profit of 15 percent.

Nationwide has about 253,000 policies statewide. Pinellas (21,588 policies) and Hillsborough (14,307) are among the five counties with the most policyholders, with Pasco (8,378) not far behind.

The fact that regulators have denied several recent rate requests is not necessarily a signal that state officials are cracking down on steep rate hikes.

"We haven't changed the way we review the rate requests," said Bob Lotane, spokesman for the Florida Office of Insurance Regulation. "If more filings are not being approved, it just means more filings are sent to us that aren't supported."

What's not an issue is that more policyholders are reaching the breaking point.

A month ago, Nationwide officials came to the Gulfport Senior Center for a public hearing on the rate request. About 50 residents showed up to voice their opposition.

Among them was James Keller, who has insured his Tierra Verde home with Nationwide for nine years and never filed a claim.

Since 2002, the retired pharmacist has watched his annual premium rise from $843 to $1,121.

"Call me when they have another public hearing," Keller, 58, said Wednesday, "because they're going to refile."