Insurer confronted with criticism concerning rate increase proposal
State Farm Florida Insurance is looking to raise rates on rental property premiums throughout the state, a fact that has been criticized by some Florida officials and consumer advocates. The rate increase would affect approximately 33,000 policies throughout Florida, including apartment buildings and homes that are rented out by landlords. State officials and consumers advocates are questioning the rationale behind the proposed rate increase because State Farm no longer writes new business in the state and has not done so for some time.
Consumer advocates question reasoning behind State Farm Florida proposal
Consumer advocates take particular issue with the insurer’s request to use some of the money collected through higher rates to pay off a $750 million loan issued by State Farm Mutual, the insurer’s parent company. State Farm Florida is looking to raise rates on rental property by 57.3%. If the insurer is allowed to use the money to repay its loan, State Farm Mutual is expected to see an 8% increase in its bottom line.
State Farm Florida not writing new business in the market
State Farm Florida currently boasts of approximately 470,000 policies throughout the state, the majority of which are held by homeowners. In 2010, the company announced that it would not renew 125,000 policies and would go on to announce that it would no longer be writing new business in the state. This is due to the risks seen in the Florida market and the insurer’s caution concerning the financial losses associated with natural disasters that appear to be a regular occurrence in Florida.
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Lack of public participation an issue of concern for some
Hearings have been held concerning the company’s rate increase proposal, but the Florida Justice Association is calling into question the lack of multiple hearings throughout the state. Association representative Reggie Garcia claims that there is a lack of public participation in these hearings.
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