America’s third largest home insurer State Farm is requesting a 15 percent rate hike for Florida homeowners as it restructures its insurance discount and deductible models, the Sun Sentinel reported. State Farm is pursuing the deal because, according to the company, its “financial position has deteriorated significantly over the past several years.” State Farm has reported that its claims-paying reserves decreased to $368 million last year from $822 million at the end of 2007. The Office of Insurance Regulation will hear State Farm’s plan on July 25.
While the restructuring will raise or reinstate certain discounts, the changes are expected to increase the average homeowner’s policy by 14 percent statewide, 49 percent for renters and 27 percent for condo owners. However, the actual increase for individual policyholders will vary widely based on discount eligibility.
State Farm is currently the second largest home insurer in Florida with 466,797 home insurance policies, including 66,960 in Broward, Palm Beach and Miami-Dade counties. It had been the largest before the OIR allowed the company to shed some 125,000 policies over the last few years.
The deal does propose to reinstate the popular home and automobile discount, giving eligible policyholders a 10 percent discount on the non-hurricane portion of their homeowner’s insurance premiums if they also have an auto policy with the insurer. “That’s a positive option for customers,” Michal Connolly, State Farm spokesperson, said. “All of these changes are to better reflect what’s appropriate for that discount or option.” [Sun Sentinel]