Newspaper article The Florida Times Union

State Farm Asks to Hike Home Rates by 71.5%; Florida's Top Property Insurer Cites the Increased Costs of Doing Business in the State

Newspaper article The Florida Times Union

State Farm Asks to Hike Home Rates by 71.5%; Florida's Top Property Insurer Cites the Increased Costs of Doing Business in the State

Article excerpt

Byline: URVAKSH KARKARIA

Floridians whose homes are covered by State Farm Insurance Co. could soon be in a world of financial hurt.

The carrier asked state regulators Friday for two statewide rate hikes totaling 71.5 percent on its homeowners policies, a move that could add more than $700 to State Farm's average $1,000 annual premium.

State Farm, the state's No. 1 property insurer, covers more than 940,000 homes in Florida, including over 93,000 on the First Coast.

The company is also seeking an average 95.3 percent statewide rate increase on its 30,000 mobile-home policies, including 1,385 in Northeast Florida. And State Farm wants to jettison its nearly 1,500 condominium-association policies and drop wind coverage on more than 39,000 homes in coastal areas.

"These [are] big changes, and the rate increases look extensive," company spokesman Chris Neal said, "but I guess if there's any good news here, it signals that we are doing everything we can to stay in this market."

The rate hikes, which could take effect as early as August, include a 58.8 percent statewide average -- the amount a Florida policyholder would pay on average -- increase to help State Farm offset higher reinsurance costs. Insurers buy reinsurance, or insurance for insurers, to help offset the cost of paying claims after a major storm or other catastrophe.

State Farm's reinsurance costs starting July 1 are expected to nearly triple from the same time last year, Neal said.

"We know we can't do business in Florida without reinsurance," he said. "It's just a fact of life."

State Farm is seeking an additional 12.7 percent statewide average rate hike because of the "increased cost of doing business in Florida," Neal said.

Claims are more expensive because of rising building material costs, and the risk of insuring homes in the state is greater, he said.

State Farm's last rate increase -- 8.6 percent -- went into effect in February.

Neal could not say what might happen if the Florida Office of Insurance Regulation does not approve State Farm's rate increase requests. …

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