5
Florida homeowner insurance companies seek rate increases
Higher
home rates still needed, five providers say
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Article Courtesy of The Sun Sentinel
By PAUL
OWERS
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.
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