State Farm Rate Hike

Florida insurance chief rejects State Farm rate hike

Florida's insurance commissioner denied State Farm's 47.1 percent rate hike request, but the insurer may turn to state court of appeals.

Florida's insurance commissioner has again rejected State Farm Insurance of Florida's request for an average 47.1 percent rate hike.

Kevin McCarty's order issued Monday reaffirms a decision issued last month by Administrative Law Judge Daniel Manry that denied State Farm's increase request. Manry determined that much of the evidence the company presented to support its demand for higher rates was at times ambiguous, contradictory and lacked credibility.

State Farm, the largest private insurer operating in Florida, filed the rate request last summer.

After Florida's insurance commissioner rejected State Farm's initial 47.1 percent rate hike request, State Farm, Florida's largest private insurer, appealed to the Division of Administrative Hearings.

There was a public hearing in late October.

The insurer said its analysis of its risk and projections of losses supported a 67 percent increase in rates.

Chris Neal, a spokesman for State Farm, said the company is obviously disappointed that the Office of Insurance Regulation didn't grant the insurer the rate increase it had requested.

''Our goal is to get an adequate rate and we'll continue to do whatever we can to reverse OIR's decision,'' said Neal, adding that the company could turn to the First District Court of Appeals.

Florida law would allow State Farm to petition the court of appeals to review the OIR ruling.

State Farm has repeatedly told insurance regulators and Manry that it needs higher rates to rebuild its cash reserves so it would have enough money to pay future claims, especially after a catastrophic storm.

Neal said the company also plans to take ''a long hard look at how we operate'' in Florida due to its deteriorating financial condition.

The company already has filed a notice that it intends to reduce its exposure to about 675,000 policies. It now has about 845,000 policies.

State Farm's last rate change was a 9 percent reduction that took effect Oct. 1, 2007. It remains in effect.

Material from The Associated Press was used in this report.