Florida CFO Asks For Home Insurance Rate Freeze

Florida CFO Asks For Home Insurance Rate Freeze

By Daniel Hays

NU Online News Service, Feb. 3, 4:25 p.m. EST?Florida Chief Financial Officer Tom Gallagher said today he has asked state insurance regulators to freeze all rate increases for homeowners policies citing one company's request for a double-digit rate hike.[@@]

Homeowners who have suffered losses from the four back-to-back hurricanes which hit the state last year "should not be victimized a second time," announced Mr. Gallagher.

"The market needs to stabilize and state lawmakers should have the opportunity to act on recommendations for insurance reform that will help offset the need for rate increases," Mr. Gallagher declared.

He said he was making his request after hearing that the Office of Insurance Regulation had received a request from Columbus, Ohio-based Nationwide for an average homeowners rate increase of 28.3 percent.

Mr. Gallagher said he had also learned today "that Nationwide has submitted a rate request in excess of 100 percent for mobile homes."

"I'm extremely concerned that there is a trend with companies, including Nationwide, trying to recoup their losses from the hurricanes or raising their rates so policyholders are forced to drop coverage," he said.

Nationwide, according to Mr. Gallagher's office, received approval last July for a 19.8 percent average homeowners increase and a 21.5 percent boost on mobile home rates.

A Nationwide spokesman ,Joe Case, said the company would not have much to say until it can assess the impact of Mr. Gallagher's action. He Nationwide's request for a mobil home rate increase would have "minimal impact" on that market because the company is not a major writer of mobil home insurance.

He said that increase request was based on "models approved by the Florida Hurricane Loss Projection Modeling Commission that we use to assess our company's future loss potential from hurricanes" and is not an "an effort to recoup past losses." Mobil homes are a significant risk in Florida where hurricanes are a high likelihood, Mr. Case added.

"Insurance companies should not be in a rush to raise rates," Mr. Gallagher noted. "The prudent thing to do is to slow down and consider the consequences of rate increases on storm victims who are not able to handle an additional financial burden.

"That's why I'm asking state regulators to hold off approval of pending and future rate increases," he said.

Kevin McCarty, the commissioner who heads the Office of Insurance Regulation, commented in an e-mail statement that he recognized Mr. Gallagher's "concerns with the recent rate increases filed with our office and theneed for the insurance industry to catch their collective breath following the four hurricanes.

"Working within the boundaries of Florida law, I will work with insurers that have filed rate requests and push for a delay in the approval or disapproval of filings pending action by the Florida legislature in the upcoming session. We remain committed to working with policymakers to implement insurance reforms that help expand capacity in our insurance market to both improve the availability and affordability of insurance for Floridians."

Mr. McCarty has the authority to act on rate requests without the approval of Gov. Jeb Bush and his three elected cabinet members who include Mr. Gallagher.