State Farm's request, in light of its comparatively small nine percent rate cut last year, brought immediate criticism from lawmakers. Rep. Bill Galvano (R-Bradenton) called it “inexplicable.” While the hike won't impact fellow representative Keith Fitzgerald (D-Sarasota) -the company is not renewing his personal homeowners' coverage-he nonetheless expressed surprise at the hike, saying it shows the insurance problem has not been solved.

State Farm traditionally goes “all in” on rate hike requests. In 2006, it sought a 52 percent rate increase, and ended up with half that.

Public hearings are mandatory for rate increase requests over 15 percent, and the hearing for State Farm Florida was held August 12 in Tallahassee. Although OIR was still officially considering the request at press time, company officials did not get a warm reception at the three-hour hearing. Skeptical regulators grilled them about the claims that they were losing money, their disbelief and displeasure evident.

Into the Fray

McCarty's OIR has not been shy about calling insurers into account.

Last year, an Allstate request for rate boosts up to 41.9 percent was put on hold after the company refused an OIR request for documents, arguing that to do so would disclose trade secrets. McCarty filed suit, and the acrimonious and well publicized court battle ended with a ruling in OIR's favor. A September 15 proceeding before the Florida Division of Administrative Hearing to examine whether Allstate falsely certified its September 2007 rate filing and falsely asserted trade secrets was cancelled August 15 when the parties entered into what was termed a limited agreement.

In addition to paying a $5 million fine to the Insurance Regulatory Trust Fund, OIR said that the agreement required Allstate to “lower its homeowners insurance rates in all territories of the state by 5.6 percent within 30 days of the agreement, for a total reduction of 19.8 percent when including the 14.2 percent reduction that took effect June 1, 2007. Allstate also must write 100,000 new homeowners insurance policies over the next three years; and Allstate's corporate office must cancel a $175 million surplus note it issued to the Florida Allstate companies.”

OIR Remains Upbeat

Despite the court battles and carrier pull-backs, the mood remains determinedly positive at OIR. “The Office of Insurance Regulation has licensed 27 new homeowners insurance companies since 2006, and that is great news for the property insurance market in Florida,” remarked Florida Insurance Commissioner Kevin McCarty. “It is proof that the private insurance industry believes it can succeed and be profitable in Florida by offering competitively priced products.” The OIR said that as of March 31 (the end of the first quarter), these companies reported 450,000 personal residential policies in force, representing a 10 percent share of the residential property insurance market in Florida.

Additional data from OIR for the same time period revealed that 569,018 personal residential policies were cancelled or non-renewed for calendar year 2008. The notable companies declining to write or renew coverages were Allstate Floridian, State Farm Florida, Nationwide Florida, and USAA (except for active military personnel). However, in the same quarter, 524,726 new personal residential policies were written, bringing total in-force personal residential policies to 6,110,347.