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State Farm on Hot Seat

August 12th, 2008 by flanews

State Regulators are trying to decide if State Farm needs to raise rates by 47 percent to stay in business. State Farm says it needs a rate hike to prepare for a big hurricane. As Whitney Ray tells us, regulators are trying to figure out if the insurer is overstating its risk.

Hear it Here: State Farm on Hot Seat

State Farm executives swore to tell the truth. Then were grilled by regulators who want to know why the company thinks hurricanes will bankrupt the insurer.

Why is it you take into consideration that theres going to be greater frequency and you dont take into consideration that thats not correct? asked OIR General Counsel Steve Patron.

State Farm says theyre not prepared to adequately protect its one million Florida policyholders if big storms hit. They want a statewide average 47.1 percent rate hike. In some Florida counties the rate would go up almost 90 percent.

Tina Risley has been a State Farm customer for 36 years. If the rate hike is approved the insurance on her St. Petersburg home would go up 70 percent.

Im approaching retirement age and will I be able to maintain my home in St. Petersburg, or will I be forced to move out of the state, said Risley.

State Farm says if the rate hike isnt approved dropping policyholders is a possibility.

Well be reviewing all our options with what ever decision OIR makes, said State Farm Spokesman Justin Glover.

If the outcome was left up to the governor, State Farm wouldnt get a rate hike.
Because the profits theyve made nationally have been extraordinary, said Governor Charlie Crist.

Whether or not an extraordinary storm can wash away those profits is up to regulators to decide. People who couldnt attend the hearing and want to comment on State Farms request can email the Office of Insurance Regulation at ratehearings@fldfs.com.

Posted in Housing, Hurricane Season, Insurance, State News, Weather | 4 Comments »

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