Nationwide Cuts Fla. Customers, Not Rates

Nationwide is seeking a homeowners insurance rate increase of nearly 70 percent in Florida while decreasing the number of policyholders by 38,000, according to an insurance department official.

Bob Lotane, a spokesman for the Office of Insurance Regulation, said Nationwide's recent rate reduction request is only one of an ongoing set of Florida market maneuvers by the company.

Most recently, Nationwide Insurance Company of Florida, a subsidiary of the Columbus, Ohio-based carrier, submitted a 4.5 percent statewide reduction request.

The request comes after Florida Insurance Commissioner Kevin McCarty released property insurance discounts that insurers are required to pass along to policyholders, amounting to an average 24 percent statewide.

Discount requirements reflect the savings insurers are expected to receive by purchasing low cost reinsurance through the state's Florida Hurricane Catastrophe Fund. The discounts apply only to the hurricane portion of the homeowners policy.

Commissioner McCarty rejected Nationwide's 4.5 percent reduction, said Mr. Lotane, just as he had the company's request for a 71.5 percent increase.

While the 71.5 percent increase is going to arbitration and the 4.5 percent reduction is in negotiation, the company is now proceeding with the nonrenewal of 25,000 policyholders.

Under recently passed legislation that increases Citizens capacity for property insurance and its reinsurance programs, the company is entitled to cancel policy renewals after filing a rate reduction, Mr. Lotane explained.

"It's totally legal," he said.

The company said Mr. Lotane is not waiting for the renewal date, but issuing the notices months in advance and following up with phone calls to customers explaining the situation.

In total, he said Nationwide will have cancelled 38,000 customers.

Nationwide contends it needs the rate hikes because its cost of reinsurance increased. The department contends that the increase is not needed.

According to the department, Nationwide has more than 253,000 policyholders statewide.

A request for comment from Nationwide drew no immediate response.