news-press.com Tallahassee bureau
Originally posted on March 31, 2007
TALLAHASSEE — More than 250,000 Nationwide insurance policyholders face a statewide average 54 percent rate increase to protect their homes.
The increases would take effect this summer or when policies are renewed but are likely to be less than 54 percent for many policyholders.
"They're going to have to make a new filing that in the end is going to make this less than 54 percent," Bob Lotane, with the state Office of Insurance Regulation, said Friday.
Earlier this year, state regulators denied a request from Nationwide Insurance Company of Florida for a 71.4 percent increase. Its justification was the company paid more than $1 billion in property damage claims during 2004 and 2005, when eight hurricanes hit the state.
The company appealed that decision to an arbitration panel that released its decision Friday.
The arbitration panel, in its decision dated March 23, ruled the 54 percent increase was "not excessive, inadequate or unfairly discriminatory."
The approved rate increases will vary widely from one location to another. Homeowners in some coastal areas could pay more than twice the statewide average.
"This approved rate helps us build a surplus and be prepared for future events," Nationwide spokesman Eric Hardgrove said Friday.
The final impact on Nationwide's policyholders remains unsettled.
The arbitration panel gives the insurer and state 10 days to decide whether to cap the largest increases. Until those decisions are made, increases by geographic areas are not available.
State insurance regulators were not pleased with the outcome.
"I would not call Florida getting a 54 percent average a victory," Lotane said.
Florida's Insurance Consumer Advocate was allowed to intervene in the case. Advocate Bob Milligan called the decision "a partial victory."
"In our view, it should have been half of what it ultimately turned out to be," he said.
One Lee County homeowner whose policy was canceled by Nationwide said the 54 percent increase doesn't sound so bad. Bonita Bay resident Don Hunt was dumped by Nationwide last year and ended up going with Lexington. He paid nearly double what he did with Nationwide.
"Their (Lexington's) rates are higher, and they don't offer as much," Hunt said.
"I don't know what Nationwide did with their rates last year, but if I had to pay 54 percent more than the $7,000 a year I was paying, it would be much better than what I have to pay now."
Lotane said Nationwide's new rates can't take effect until the insurer also settles how much it will reduce rates as required by the Legislature in January. The company's earlier filing for a 4.5 percent reduction is now outdated, Lotane said.
The Office of Insurance Regulation turned down Nationwide's July 2006 request in part because the company included what the agency called an unjustified 15 percent profit.
The company refused offers to take a lower increase, and in the interim, began dropping 35,000 Florida customers.
"There was no doubt they had justified a hefty increase, but they weren't willing to back off on this one," Lotane said.
Among the areas arbitrators said they trimmed from Nationwide's request:
• Costs for new business, such as advertising, because the company is not taking new business in Florida and writing renewals only.
• Commissions for agents and brokers, which regulators argued should not be allowed to increase on par with other costs.
• Profits Nationwide requested because of the added risk of doing business in Florida.
— The Associated Press and The News-Press staff writer Jacob Ogles contributed to this report.
http://www.news-press.com/apps/pbcs.dll ... 10487/1075
Huh.. Boy they must have really lost money the last couple years..
