United Property to Refund Millions

Insurance Commissioner Kevin McCarty has ordered United Property and Casualty Insurance Company to refund policyholders an estimated $43 million in homeowners' premiums that were collected without regulatory approval.

The dispute started when the St. Petersburg-based company notified the OIR last October that it planned to implement a statewide average 88.5 percent rate increase on all new and renewal policies, effective Sept. 1, 2006. The request was later adjusted downward to 78.8 percent. At the time, the state's rating law allowed carriers to implement the rate increase prior to receiving regulatory approval. The "use-and-file" rating method, however, was rarely used because the law provided that regulators could determine the increase was too high. The carrier would be required to return to policyholders the difference between the charged rate and the final approved rates. Under the state's recent property reform law, no use-and-file rates may be implemented on property filings as of Jan. 2007.

In December, the OIR notified the carrier that it was disapproving the rate change and estimated that United policyholders should receive more than $43 million in refunds. Initially, the company requested the dispute be the subject of arbitration, but later dropped its objections and agreed with McCarty's position. "Recent legislation in Florida prohibits property insurers from using use-and-file rates in the future, but United engaged in this action last year before it was banned," he said. "We will continue to aggressively pursue all refunds and credits that are due to Florida consumers."