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Florida Hears First Community’s Home Rates; OKs Dwelling Increase

Insurance Journal

March 27, 2011

Florida regulators held a public hearing last week to consider the First Community Insurance Co.’s request to raise its homeowner rates a statewide average by 23.3 percent.

The company said there are two driving forces behind the rate proposal. One is the combination of hurricane-modeled losses relative to the insurer’s wind premiums, which have declined due to hurricane mitigation credits. Also, the insurer’s non-hurricane loss-trend has increased by 19.6 percent with a large contributor being sinkhole losses.

The company said the rate increase is lower than its indicated statewide average increase of 36.3 percent out of “consideration of rate stability for the consumer.”

If the rate proposal is approved as filed, 15 percent of the insurer’s 31,588 policyholders will see a decrease and 35 percent will see an increase below the statewide average, according to Judy Copechal, vice president and products manager.

The hearing elicited criticism of the rate hike from one party. Steve Alexander, an actuary with the Florida Consumer Advocate’s Office, said the insurer’s statewide average increase should be 12.3 percent. He said that in his opinion the insurer’s expenses are too high. Alexander has been critical of Florida-domestic companies that use managing general agents and other affiliates.

First Community is a wholly-owned subsidiary of the St. Petersburg-based Bankers Insurance Group. In 2009, the latest data available, the insurer reported $28.8 million in net written premiums with a net income of $864,000. The insurer also reported it had $20 million in surplus.

Correction

In a previous story, Insurance Journal reported that the homeowners filing was a re-file of a proposal heard in October and that the company and regulators hit a stalemate over that proposal. However, the October filing was for a statewide average 26.7 percent increase in fire and dwelling policies, not a homeowners filing. Also, the Office of Insurance Regulation approved a 21.6 percent increase that applies to new policies as of April 1 and renewals as of April 26. Copechal said that all issues with the OIR over that filing were resolved amicably. Insurance Journal regrets the error.