5 Florida homeowner insurance companies seek rate increases

Higher home rates still needed, five providers say

Article Courtesy of The Sun Sentinel

Published June 29, 2007


Five homeowner insurance companies are trying to raise rates, only weeks after the state ordered providers to lower premiums.

The rate requests from Florida Farm Bureau, The Hartford, Metropolitan Property and Casualty, Cincinnati Insurance Cos. and Auto Owners have some industry observers questioning Florida's plan to lower property insurance costs.

Auto Owners is seeking a statewide average increase of 41.9 percent, while Cincinnati Insurance wants to increase rates by an average of 37.5 percent.

Florida Farm is asking for an average 30.3 percent increase, Hartford wants to raise rates 29.5 percent and Metropolitan Property and Casualty is seeking an average increase of 14.9 percent.

The state must approve all rate requests. "We want to ensure that the rates being charged are not excessive, that they're adequate and not discriminatory," said Jonathon Kees, spokesman for the Office of Insurance Regulation.

Bob Milligan, the state's insurance consumer advocate, said Gov. Charlie Crist and Florida legislators engaged in an "enthusiastic and energetic attempt" to cut costs during a special legislative session in January. The state's plan allowed companies to buy cheaper reinsurance, which is insurance for insurance companies, and pass savings on to policy holders.

"But at best, it was a near-term solution that was fraught with future risk," Milligan said. "We hope to come up with a solution that takes away that future risk."

In the meantime, Milligan urged consumers to find cheaper rates through a Web site, shopandcomparerates.com, launched by the state this week.

Florida Farm Bureau said it did comply with the state's order to cut insurance costs, reducing rates by about 25 percent, effective June 1. But it later determined that the reduction was too steep, calling this latest request for an increase a "correction."

"The decrease, as the state established, wasn't warranted," said Missy Shelley, an actuary for Florida Farm Bureau.

If the state approves the rate increase, it still would result in a net decrease of 1.6 percent, Shelley said. A public hearing on the matter is scheduled for 10 a.m. July 10 in Tallahassee.

Cincinnati Insurance said in a statement that it couldn't take advantage of reinsurance savings from the state because the company already had negotiated reinsurance contracts that took effect Jan. 1.

Metropolitan Property said it has incurred more than $2 in property losses for every dollar in premiums collected over the past several years in Florida.

"The company simply cannot continue to operate in such a fashion, as we have a responsibility to manage our business for the benefit of our millions of policy holders countrywide," the company said in a statement.

Hartford said in a statement that "we adjust rates periodically to ensure that we are responsibly managing our risk and properly pricing our policies to adequately cover that risk."

Auto Owners, seeking the largest average rate increase of the five companies, declined to comment.

It's unknown how many other insurance companies will seek rate increases. They have until Sept. 30 to submit requests showing the actual savings they received from the cheaper reinsurance.

The state says it has approved an average decrease of 15 percent in property insurance rates for new and renewed policies so far this year.