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State Farm Rate Hike Denied

August 26th, 2008 by Mike Vasilinda

State Farm insurance customers are breathing a sigh of relief tonight. The state has said no to an average statewide 47 percent rate hike, that could have been much higher in some areas of the state. As Mike Vasilinda tells us, the denial doesn’t mean rates won’t eventually go up, or that State Farm won’t start dropping policies.

On August 12th State Farm executives told regulators they needed a rate hike to protect their ability to pay future claims for their customers.

The same day, Governor Charlie Crist was asked about the rate hike.

“I think I’ll handle this case appropriately and I think you know what I mean by that,” Crist said. “Rejecting it.”

He was also asked if he would intervene in the case.

“I think I just did,” he said.

Now, regulators are telling State Farm the company is trying to make too much profit, is overcharging for reinsurance and that the rate hike is out of the question.

“I though the filing was just weak. It did not have appropriate support in a lot of the areas,” Ed Domansky with the Office of Insurance Regulation said.

Regulators say the governor’s remarks had no bearing on their decision.

State Farm has basically two options: they can appeal the denial or they can just live with it. Which means they could start dropping policies.

We asked State Farm spokesman Michael Grimes what was next.

“We are now going to review all our options and take the best course to protect our Florida policy holders,” Grimes said.

Then we asked if dropping policies was an option.

“That’s all I can really say at this time,” Grimes said.

Regulators say they will continue working with the company. State Farm has already promised not to drop more than 50 thousand wind customers in the state.

State Farm has 950,000 policyholders statewide.

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