State Farm: 47.1% Florida Hike

State Farm Florida Insurance Co. filed an average 47.1 percent homeowners insurance rate increase with the Florida Office of Insurance Regulation.

Ed Domansky, spokesperson for the OIR, said a public hearing will be held on Aug. 12 in Tallahassee.

State Farm Media Specialist Michal Connolly said State Farm Florida must be able to charge rates that cover expected costs of loss and operating expenses.

“While this rate increase poses a difficult situation for our customers and our company, it is the only responsible choice,” Connolly said in a written statement.

Florida State Sen. Jeff Atwater, R-North Palm Beach, was quick to point out that a new law, the Homeowners’ Bill of Rights, means the filing will face close scrutiny. “The rate filing will be processed completely in the sunshine and it must conform with state-approved scientific and actuarial models, not State Farm’s profit goals,” Atwater said.

State Farm predicts that if action is not taken, results will worsen to a net underwriting loss exceeding 100 percent by 2009. The company projects that in 2009, for every $1 it receives in premium income, after reinsurance costs, it expects to pay out more than $2 in claims and expenses. These projections assume no hurricanes make landfall in the state.

In recent months, State Farm Florida suspended making interest payments on the $750 million in outstanding surplus notes due to State Farm Mutual, in order to preserve State Farm Florida’s capital, according to its report.

State Farm Florida has also limited its writing of new property insurance business in the state.