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State Farm gets rate increase, will keep South Florida policies

Policyholders may not consider it much of a victory, but State Farm won a battle Friday to raise property insurance rates for thousands more residential and commercial clients.

As part of the deal with Insurance Commissioner Bill Nelson, the state's largest insurer agreed to keep more than 15,000 South Florida business policies that it had wanted to dump.

"Staggering. The rates keep going up," said Cathy Liberto, a State Farm customer who has watched her premiums more than double even though her Dade County home was undamaged by Hurricane Andrew.

Nelson earlier revoked State Farm homeowners insurance increases averaging 13.8 percent. Friday, he accepted a hearing officer's order saying the company should get the increase.

Florida homeowners, in the midst of a June-November hurricane season, have been hit with a steady stream of rate increases as insurers try to recover from $16-billion in insured losses that rocked the industry after Andrew hit South Florida in 1992.

Allstate, the state's third-largest insurer, is waiting for Nelson to rule on a requested 41 percent increase.

Nelson was out of town Friday and couldn't be reached for comment, but Department of Insurance spokesman Don Pride said a decision on the Allstate request will come in the next few weeks.

"I don't think he'll approve a 41 percent increase," Pride said.

But Sean Mooney, an economist with an industry trade group, the Insurance Information Institute in New York, said with Florida's risk of hurricanes, "You can expect a difficult market."

Homeowners premiums statewide have jumped an average of 74 percent since Andrew jolted the industry. With those increases in place, rates may stabilize at a 3 percent to 4 percent a year rise, Mooney said.

Most Florida customers won't lose coverage, he added, because of a moratorium imposed by state lawmakers that limits the number of policies a company can drop.

"If you are newly moving to Florida you will probably not get insurance with a company of your choice. If you are moving from the Midwest, your rates are going to be substantially higher," Mooney said.

State Farm's average premium for a $100,000 masonry home in the Miami area was $474 a year with a $250 deductible before Hurricane Andrew. After the increase approved Friday it will be $885 with a $500 deductible, company spokeswoman Lynn Frish said.

That's just an average, said Liberto, who has watched her homeowners premiums jump from $450 a year in 1991 to nearly $900 now.

After the increase, she said, "I'll be well over $1,000."

Under Friday's agreement, 15,200 retail stores and other businesses will be able to renew their coverage if they agree to a 10 percent deductible on hurricane damage.

Nelson agreed to retract an earlier order revoking State Farm increases ranging from 7.7 percent to 27.3 percent on commercial policies.