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OIR Balancing Act

July 17th, 2008 by flanews

State Farm is asking to raise rates 47 percent. Now state regulators have to decide whether or not to approve the rate hike. As Whitney Ray tells us, State Farm isnt the only insurer in Florida seeking a double digit hike.

Hear it Here: OIR Balancing Act

Hurricanes in 2004 and 2005 devastated Floridas coast, and bankrupted several insurance companies. Insurers who want to raise rates to prepare for a big storm have to go through the Office of Insurance Regulation for approval.

Our analysts and our actuaries look at every file very carefully, said Ed Domansky, spokesman with the Office of Insurance Regulation.

This year a few small rate hikes have been approved, but none as high as State Farms request. State Farm is asking for a 47 percent rate increase. The request shocked some, but not Gary Landry with the Florida Insurance Council.

In Florida, as we said many times before, theres two trillion dollars of risk out there and were collecting inadequate premiums to cover this risk, said Landry.

State Farm isnt the only insurer seeking a double digit rate hike. Farm Bureau is asking regulators to approve a 28 percent increase.

Florida Association of Insurance Spokesman Bob Lotane said companies need rate hikes to keep from going bankrupt after a hurricane.

Theres only one thing thats angrier than a person whose insurance rates have been increased, and thats a person who cant get their claim paid in a timely manner, said Lotane.

State Regulators say theres a balancing act involved when considering a rate increase request.

Consumers want to pay the least amount they have to for their insurance but at the same time too the companies that are paying for those policies need to have money to pay claims when claims should come in, said Domansky.

A public hearing has to be held for any insurance company wanting to increase rates more than 15 percent. The public hearing for State Farms rate increase request will be held August 12th. Farm Bureaus hearing is scheduled for July 30th State Lawmakers froze rates for state-run insurer Citizens, but unlike a private company, Citizens can levy assessments to cover claims.

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