State Farm Loses Second Bid for 47% Rate Hike in Florida
An administrative law judge in Florida on Friday rejected a 47.1 percent average rate increase sought by State Farm Florida, the state’s largest privately owned property insurer.
The Florida-only affiliate of Illinois-based State Farm Insurance Co. failed to show its requested rate was not excessive, inadequate or unfairly discriminatory, Judge Daniel Manry wrote in a recommended order.
Florida Insurance Commissioner Kevin McCarty now has 30 days to issue a final order.
McCarty earlier this year rejected the company’s proposal, but State Farm appealed. He found State Farm failed to submit sufficient data to support such a massive increase. It would range from 23 percent in inland areas to 86 percent along Florida’s coasts.
State Farm issued a statement disputing the judge’s findings, arguing the increase is justified to stabilize the company’s deteriorating financial condition and serve its customers.
“We need to be able to pay our customers’ claims, particularly those due to catastrophic events such as hurricanes,” company officials said. “We acknowledge that this rate increase poses a difficult situation for our customers, especially in light of these tough economic times; however, it is the only responsible choice.”
McCarty declined comment because he is the final hearing officer. If he again denies the increase, State Farm could appeal in the court system or submit a new request.
Last year, McCarty and State Farm agreed on a 9 percent rate reduction after the company obtained a 52.8 percent increase in 2006.
In September, he ordered State Farm to issue credits and refunds totaling $120 million to current and former hurricane policyholders who didn’t receive or weren’t told they could get a discount for making their homes more resistant to wind damage.
State Farm is Florida’s largest privately owned homeowner insurer with approximately 1 million customers. State-backed Citizens Property Insurance Corp. is the largest overall with 1.2 million policyholders.