Florida regulators have approved an average 6.9 percent rate hike for State Farm Florida Insurance Co., which is the insurer’s fifth increase in as many years.
The insurer had initially sought an average 14.9 percent increase citing hurricane and underwriting losses.
In addition to the 6.9 percent average increase in homeowner rates, rates for renters will increase by six percent while rates for condominium owners will drop by six percent. The new rates will apply to renewal policies, effective Feb. 1, 2013.
At a recent public hearing, executives said the Winter Haven, Fla.-based insurer had seen its surplus drop from $822 million in 2007 to $368 million in 2011. They also said that following the 2004 hurricane season it had to borrow $750 million from its parent company, State Farm Mutual, an amount it has yet to pay back.
Regulators, however, objected to State Farm Florida’s proposed 16 percent profit and contingency factor included in their rate proposal and the 10.8 percent commission it said it was paying agents despite not writing new business.
The approved 6.9 figure is fifth increase the insurer has received since 2009. That year, the insurer received a 27.9 percent increase, which was followed by a four percent increase in 2010. State Farm also received approvals for 6.6 percent and 18.8 percent hikes, which were implemented over a two-year period in 2011-2012.
State Farm Florida spokesperson Michael Bower said the insurer will not appeal the state’s Office of Insurance Regulation decision.
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