NU Online News Service, March 22, 1:14 p.m. EDT
State Farm has been denied an average statewide 14.3 percent homeowners rate increase in Louisiana.
State Farm spokeswoman Molly Quirk says the company is still in talks with the Louisiana Insurance Dept. in order to make its case for the requested rate increase, which was filed in order to "move toward rate adequacy."
The conversations include the company's use of catastrophe models in calculating rates. Quirk says State Farm uses hurricane models from all three modelers (Risk Management Solutions, AIR Worlwide and EQECAT).
Insurance Commissioner Jim Donelon could not immediately be reached to comment about the State Farm rate denial.
Last year Donelon rejected a 19.1 percent rate increase for State Farm. He later approved a 9.9 percent rate increase.
When denying the rate request early last year, Donelon said he had concerns about State Farm's use of the EQECAT model, which projected hurricane losses 150 percent higher than losses produced by the two other industry hurricane models.
RMS has since revised its model. RMS says Texas and the Gulf states now contribute more to the overall risk profile.
Donelon recently approved a 6.5 percent rate increase for the state-run Louisiana Citizens Insurance Corp. The last resort insurer originally asked for a 9 percent hike, but Donelon said some flaws in the rate calculations lowered the request. Plus, the residual insurer looked to boost capital and reserves with the increase—an unnecessary move because Citizens has the power to assess companies if it needs funds to pay claims.
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