GALLAGHER CALLS FOR INDEPENDENT REVIEW OF STATE FARM’S RATE REQUEST
Citing concern that insurance companies are using the 2004 hurricanes to unfairly raise rates, Florida’s Chief Financial Officer Tom Gallagher called for an independent review of a rate increase on homeowners being sought by State Farm of Florida, the state’s largest insurer. The independent review, the third review since June 1, will be carried out through Gallagher’s Consumer Advocate’s Office.
“This rate hike could potentially impact more than 900,000 Floridians and deserves close scrutiny,” Gallagher said. “Even more troubling is that State Farm’s request comes on the heels of a study showing the company earned record profits – billions of dollars – in 2004, despite four hurricanes.”
Gallagher has called for independent reviews of three rate requests – Allstate Floridian Insurance Company, Cincinnati Indemnity Company/Insurance Company, and now State Farm. Following reviews of the first two companies, Gallagher called for the rejection of both rate requests citing deficiencies and saying the “numbers just don’t add up.”
Cincinnati’s request is the only one to date that has been denied by the Office of Insurance Regulation. Allstate’s request is still pending. The Office of Insurance Regulation is headed up by Insurance Commissioner Kevin McCarty, who regulates insurance rates.
State Farm filed a request to raise homeowners insurance premiums by an average of 8.6 percent with the Office of Insurance Regulation yesterday. But Gallagher said that the percentage amount that State Farm has requested is deceiving because in many areas, the rate burden would be as high as 40 percent.
State Farm of Florida collected $1.03 billion in homeowners premiums in 2004. An 8.6 percent increase means Florida homeowners would pay another $89 million in premium.
“State Farm customers deserve answers from their insurance provider. And I intend on making sure that they get them," Gallagher said.