Make us your home page

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

State Farm pleads case for rate hike before judge

TALLAHASSEE — State Farm Florida began to plead its case Monday, explaining to a judge why it needs to raise property insurance rates by 47.1 percent, an increase regulators turned down.

State Farm is appealing the rejection with a hearing before an administrative law judge in Tallahassee, a process expected to last most of this week. A final decision on rates could be more than a month away.

"This is driven by declining premiums," said Cynthia Tunnicliff, a Tallahassee attorney for State Farm. "State Farm has had to dip into profits or surplus to make ends meet. We can't keep doing that."

She said State Farm's costs have increased, and it is collecting less in premiums because of big discounts given to customers who strengthen their homes against hurricanes. She said State Farm has evidence that it needs a 67 percent rate increase, but it asked for only 47 percent.

The Office of Insurance Regulation disagrees.

It says State Farm didn't follow state law and properly pass on to their customers savings from buying the state's cheap back-stop insurance.

Officials also dispute whether State Farm can give itself a special kind of profit for assuming risk for hurricanes by buying backup insurance from its parent company.

State Farm of Bloomington, Ill., has a significant presence in the Tampa Bay area with about 100,000 policyholders, or almost one out of every six homeowners.

Because rates vary greatly depending in large part on location, the proposed rate hike would hit Pinellas the hardest in the Tampa Bay area, with increases from 55 to 91 percent. It could also mean increases of as little as 10 percent in parts of Pasco County, but up to 79.4 percent in Manatee County.

Administrative law judge D.S. Manry has about a month to issue a "recommended order" for or against State Farm's rate hike.

Insurance Commissioner Kevin McCarty will then review the law judge's decision. McCarty can either accept or reject the recommendation. However, he can throw out the judge's ruling only if he finds the facts don't support the decision. That rarely happens.

Earlier this year, administrative law judges ruled against Florida Farm Bureau and Hartford Insurance, which were some of the first companies to appeal the state's rejection of their rate hikes after lawmakers made it tougher for insurers to raise rates in 2007.

Insurers used to be able to appeal rate rejections by going to an arbitration panel, a preferred way of settling rate disputes, because it was quicker and insurers often ended up with a compromise on rates. But lawmakers passed a law that got rid of arbitration earlier this year.

State Farm pleads case for rate hike before judge 10/27/08 [Last modified: Friday, October 31, 2008 7:15pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Wrestling to return to old Tampa armory — but just for one night

    Human Interest

    TAMPA — For the first time in decades, wrestling will return to the old Ft. Homer W. Hesterly Armory with a reunion show scheduled for late September.

  2. Wanted: New businesses on Safety Harbor's Main Street

    Local Government

    SAFETY HARBOR — A green grocery store, a hardware store, restaurants, boutiques and multi-use buildings are all wanted downtown, according to discussion at a community redevelopment workshop held last week. And to bring them to the Main Street district, city commissioners, led by Mayor Joe Ayoub, gave City Manager …

  3. John Morgan intends to pressure every Florida politician to fund wage initiative


    John Morgan, the publicity-loving personal injury lawyer/entrepreneur who spearheaded the successful medical marijuana initiative, soon plans to start collecting signatures for a 2020 ballot initiative raising Florida minimum wage. He plans to "spend millions of my own money" on the effort, but he also intends to …

  4. Westbound traffic on Courtney Campbell blocked after crash


    Westbound traffic on the Courtney Campbell Causeway is being diverted following a crash early Thursday morning.

  5. Q&A: A business leader and historian jointly delve into Tampa's waterfront


    TAMPA — As a native of Tampa, Arthur Savage has always had a passion for his hometown's history. And as a third-generation owner and operator of A.R. Savage & Son, a Tampa-based shipping agency, his affinity for his hometown also extends to its local waterways.

    Arthur Savage (left) and Rodney Kite-Powell, co-authors of "Tampa Bay's Waterfront: Its History and Development," stand for a portrait with the bust of James McKay Sr. in downtown Tampa on Wednesday, Aug. 16, 2017. McKay, who passed away in 1876, was a prominent businessman, among other things, in the Tampa area. He was Arthur Savage's great great grandfather. [LOREN ELLIOTT   |   Times]