Less than a week after he denied a request from State Farm to implement a regional storm deductible plan, Louisiana Insurance Commissioner Jim Donelon shot down an application from the insurer to raise homeowners' insurance rates 16.6 percent.
The insurer could go back to Donelon with an amended filing. Its last homeowners' rate hike of 7.8 percent was started on Feb. 15 last year after its first request for a 14.3 percent increase was denied.
State Farm's latest filing for a 16.6 percent increase would have affected more than 300,000 policyholders and added about $71.3 million in premiums to the insurer's coffers.
But Donelon says State Farm's “trend selections did not appear in line with actuarial data,” and the filing prompted “concerns regarding the magnitude of the profit provision.”
This is the second time in a week Donelon has said a filing from State Farm was too inadequate for approval.
Donelon on Jan. 24 declined State Farm's request to increase storm deductibles in some parishes because the proposal “failed to meet the requirements set forth by law.”
State Farm—which possesses a 29 percent homeowners multi-peril market share in the Pelican State, according to SNL Financial—was the first insurer to try to take advantage of the 2008 law enacted in the state to allow such a proposal.
In a statement submitted by State Farm spokesman Gary Stephenson via email, the insurer says it is “certainly disappointed” by the rate hike denial.
“Our request for this adjustment is sound,” State Farm says. “The losses and risks from coastal storms are significant. On-going claims and perils across the state, such as hail, windstorms, fire and other events, are significant.”
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