TALLAHASSEE — Florida insurance regulators Monday told State Farm Florida that it couldn't raise property insurance rates.
The state's largest private property insurer had requested an average 47.1 percent increase.
During a rate hearing two weeks ago, Office of Insurance Regulation staffers skeptically questioned the company's reports that it lost revenue because the Legislature forced it to double discounts for policyholders who harden their homes.
Ever since Gov. Charlie Crist took office and called a special session on property insurance, even talking about raising rates in Florida has become taboo.
Now the question is: What's next for State Farm?
State Farm can try to appeal the ruling through the Division of Administrative Hearings. But since sweeping 2007 legislation, no property insurer has won a reprieve from the administrative court. It can also drop more policies, which State Farm suggested it was considering. Or it could file a new rate request.
State Farm Florida spokesman Chris Neal said the company is reviewing its options "to take the best course to protect Florida policyholders," he said. He couldn't say whether the company would appeal or decide to drop policies until it has more thoroughly reviewed regulators' decision.
OIR officials said the company didn't provide enough data to support the hike.
Regulators said the company is charging policyholders too much for its reinsurance, a backup insurance for insurers. And they accused the company of incorporating too much profit in its rates. They also said the company didn't pass to policyholders the savings from buying cheap reinsurance from the state, OIR spokesman Ed Domansky said.
State Farm spokesman Neal disagreed. He said the company provided "very strong support for this rate increase."
State Farm insures about 950,000 policyholders statewide, including nearly 100,000 in the Tampa Bay area.
Last fall, State Farm agreed to drop no more than 50,000 policies and has begun cutting back on its book of business.
At the Aug. 12 rate hearing, State Farm Florida vice president Kathy Popejoy told regulators that the company was dropping wind coverage on 23,000 policies. Since then, company officials scrambled to clarify that would not violate an agreement State Farm has with the OIR to cap its nonrenewals at 50,000.
OIR said it planned to send an examiner to State Farm to look into the issue.
Domansky said regulators weren't concerned that rejection of the rate hike would prompt State Farm to drop policies.
"We'll continue to work with the company and they'll work with us to make sure the policyholders remain protected and well-serviced," Domansky said.