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Insurers ruffled, regulators pleased by judges' rulings

TALLAHASSEE — Florida insurance regulators' tough stance on insurance rates won a symbolic stamp of approval this week that has left the insurance industry reeling.

Two state administrative law judges have upheld Insurance Commissioner Kevin McCarty's refusal under a 2007 law to grant rate hikes to Florida Farm Bureau and Hartford Insurance.

"The office is pleased with the rulings, and we feel strongly that these supportive decisions will help us in our endeavors to protect Florida consumers from unwarranted rate increases," said Edward Domansky, spokesman for the Office of Insurance Regulation.

For years, insurers were able to set their own rates and later ask for regulators' permission. If insurers didn't like regulators' decisions, they could lodge an appeal by going through a fairly quick mediation process.

But among the insurance reforms last year, the Legislature made it tougher for property insurers to raise rates and to appeal regulators' decisions. Now, insurers' recourse is what used to be their last resort: a review by a Division of Administrative Hearing judge — a lengthy, costly process.

In the wake of the new insurance laws, Florida Farm Bureau and Hartford Insurance were the first companies to officially go through that appeal process following the state's rejection of rate requests last year.

They're also the first two companies to lose.

A judge ruled against Hartford on March 28, and another ruled against Florida Farm Bureau on Tuesday. McCarty still has to sign off on the decisions, but he's expected to follow the judges' orders that the rate hikes aren't deserved.

In both cases, the companies had initially filed for substantial rate decreases, then later filed for increases, canceling out most or all of the savings to homeowners. The net result of the two filings was a smaller decrease in the case of Florida Farm Bureau and an increase in the case of Hartford.

Florida Farm Bureau asked for a net rate decrease of 1.6 percent on 140,000 homeowners policies, including about 10,000 in the Tampa Bay area.

Hartford proposed a net increase of 0.4 percent to 2.8 percent on homeowners policies affecting 92,000 homes and increases of 28 to 54 percent on dwelling and fire policies affecting 2,550 homes.

If McCarty signs off on the judges' recommendations, the insurers' only recourse is to file an appeal with Florida's 1st District Court of Appeal.

"The companies have to decide whether to appeal or to go back to OIR and try to work out something," said Sam Miller, executive vice president of the Florida Insurance Council. "I honestly don't know what the companies are going to do."

Insurers have taken note. They said they hope the rulings signal to the Legislature that more dramatic measures aren't necessary.

"These two victories in the DOAH (Division of Administrative Hearing) proceedings definitely prove that OIR does not need the punitive regulatory provisions contained in Sen. Jeff Atwater's bill," said Mark Delegal, a lobbyist for State Farm.

Insurers ruffled, regulators pleased by judges' rulings 04/03/08 [Last modified: Monday, April 7, 2008 2:59pm]

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