TALLAHASSEE (CBSMiami/NSF) ? State insurance officials refuse to let insurance companies bully you with high-priced rental insurance.
On Wednesday, the officials teamed up with consumer advocates to press State Farm Florida Insurance Co. over a proposed 57.3 percent increase in rental property premiums. The company is pushing the increase despite a lack of new business.
In addition, Florida?s insurance consumer advocate questioned the rationale behind the company?s request to ask policyholders to foot the bill for paying off a $750 million loan made to the Florida subsidiary by its parent company, State Farm Mutual.
The repayment will add an additional 8.5 percent to the parent company?s bottom line and comes in addition to a 16-percent profit margin.
State Farm representatives were before the Office of Insurance Regulation to request the rate hike on roughly 33,000 policies for the owners of rental property, including apartment buildings, or single homes that landlords rent out.
The company has about 470,000 total policies in the state, the bulk of which are residential homeowners? policies. With few exceptions, State Farm has not written new policies in several years and has seen its exposure shrink. At one time in had more than 1 million policies and was the state?s largest property insurer.
?In addition to the general concerns of a nearly 58 percent rate increase, is the concern that State Farm has not given any indication that this rate increase will result in them writing any new policies,? said Brian Deffenbaugh, senior counsel for the Office of Insurance Consumer Advocate.
Despite the proposed increase, State Farm actuary Sara Frankowiak said she ?was not aware of any plans? for the company to resume writing policies in the state, but is instead shoring up its financial position.
?We certainly have concerns for the impact that this kind of rate change has on our customers,? Frankowiak said. ?But at the same time, we owe an obligation to all of our customers to make sure we are financially strong and able to pay when the storms come.?
In 2010, State Farm announced it would not renew 125,000 policies. The action came after Florida insurance officials denied a request for a 47 percent increase in homeowners premiums and the company threatened to exit the state altogether.
State Farm is also requesting a 14.9 percent increase in homeowner rates and nearly 28 percent increase in condominium insurance. Those rates are subject to separate rate filings.
Given the company?s presence in Florida, Florida Justice Association representative Reggie Garcia questioned why multiple rate hearings weren?t being conducted around the state, noting the lack of public participation.
?Why aren?t we having public hearings at least in three or four major urban areas on this issue? No one is here,? Garcia said. ?That is your prerogative, but what you obligated to do is different from what you should do.?
In response, OIR General Counsel Belinda Miller said the agency used to travel around the state seeking comment but policyholders often didn?t show up. In addition, most of the legal issues between the state and State Farm have been settled in court so both parties are pretty sure where they stand on the issue.
The statewide 57.3 percent rate hike for rental property owners varies greatly depending on the territory. Rates in Duval County would increase from $695 to $1,065, an increase of 53.3 percent. Orange County rates would jump 60.7 percent, or $720. Miami-Dade County policies would increase 110 percent to $6,008. In Monroe County, where State Farm insures just four properties, the rates would rise from $4,857 to $14,411.
The News Service of Florida contributed to this report.
Source: http://miami.cbslocal.com/2012/07/25/fla-insurance-officials-to-state-farm-stop-the-bullying/
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