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Homeowner insurance companies seek rate increases

Florida has a plan to lower property insurance costs, but some experts are questioning its viability are recent rate requests from The Hartford, Florida Farm Bureau, , Metropolitan Property and Casualty and Auto Owners.

The latter are looking for an average increase of 41.9% across the state and Cincinnati Insurance want a rate increase of 37.5% on average. Florida Farm wants to raise rates by 30.3%, and Hartford is asking for an increase of 29.5%. Metropolitan Property and Casualty is looking for an increase of 14.9% on average.

All requests must be approved by the state. A spokesman for the Office of Insurance Regulation said that they wanted to make sure that rates charged are adequate, not discriminatory and not excessive.

Meetings between the state’s governor and Florida legislators have been making strident efforts to cut costs in the early part of 2007, part of which enabled companies to purchase cheaper reinsurance (insurance that insurance companies take out), and make sure that any savings were passed on to consumers.

Hindsight suggests that this was a short-term solution with risk attached, and a long-term solution with less risk is required. Consumers are being encouraged to shop around on the Internet to find cheaper rates.

Although Florida Farm Bureau did attempt to cut rates by about 25% at the beginning of June, it later requested an increase as a “correction”, saying that the earlier reduction was too steep. Should the state approve the latest rate increase, the net result will be a decrease of 1.6%. A public hearing for this is set for 10 July.

Metropolitan’s argument for increases was that it had suffered a two dollar loss for every dollar premium over recent years in Florida, and that it could not continue to operate in such financial conditions, but must manage its business for the benefit of policy holders across the whole of the country.

Cincinnati Insurance claimed that they had already renegotiated its reinsurance contracts at the beginning of 2007, and could not make further savings at this time.

Hartford said that is adjust rates every so often to make sure that they manage risk responsibly and price policies properly to cover the risk.

No one from Auto Owners, asking for the largest increases, was available for comment.

There are plenty of other insurance companies out there, and how many of those will also be looking for rate rises? September 30 is the deadline for requests showing actual savings achieved from cheaper reinsurance.

So far this year, the state says it has seen an average reduction of 15% for property insurance rates for new and renewed policies.

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