State Farm Florida can eliminate or reduce some discounts it offers policyholders, state regulators announced Thursday, increasing premiums for homeowners as much as 28.4 percent.
The decision by the Office of Insurance Regulation will bring in $278 million in additional premiums for the company after all policies come up for renewals starting Dec. 1, agency officials say.
However, State Farm can't reduce the credits it offers homeowners for installing wind-mitigation features such as storm shutters, impact-resistant windows and doors, or reinforced garage doors to protect a home against violent weather.
Had State Farm been allowed to get out of mitigation discounts, that would have meant an additional 13 to 17 percent increase for its policyholders.
Sen. Mike Fasano, who expressed his displeasure last month when State Farm filed its request, said Thursday afternoon that he was "disappointed with State Farm and will continue to be."
"They made promises to their customers and they are breaking those promises," Fasano said. "But I'm pleased with (the Office of Insurance Regulation) that they are not doing away with the mitigation discount."
The changes that regulators are allowing "should help slow the deterioration of State Farm's financial condition," said Justin Glover, a State Farm spokesman.
State Farm says the move is a last-ditch effort to remain solvent as it prepares to stop writing property insurance in Florida over the next two to three years. The insurer has said that because policy rates are so low, it can't continue to operate in Florida and remain profitable. The company eventually would drop more than 1 million policies, including about 700,000 covering single-family homes in Florida.
State Farm can eliminate discounts for customers with more than one policy with the company, for installing burglar alarms and for not having filed previous homeowners claims.
Doing away with a discount for homeowners who have few claims could provide a big hit for them because it provided a significant decrease on policy premiums of 5 to 20 percent, Glover said.
And the company is allowed to reduce discounts it now provides for upgraded plumbing, electrical, and air-conditioning and heating systems.
Policyholders will be notified of the changes about 100 days before their current policies expire.
Last year, the company had complained that the mitigation credits — which were doubled in 2007 — were too steep and had drastically eroded its revenue in the past two years.
State Farm had requested an average 47.1 percent rate hike last year to make up some of the revenue it lost via the credits. The rate filing was rejected.
Times staff writers Jeff Harrington and Shannon Colavecchio contributed to this report, which included information from Florida News Service.