Another Insurer Raises Its Rates

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July 19, 2005 IAQ Guidelines for Assessment of Residential and

Commercial Buildings Volume 1 Issue 167

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Another Insurer Raises Its Rates

Nationwide, which covers about 300,000 homes in Florida, is the

latest to

win state approval for a double-digit jump.

by Jeff Harrington, St. sburg Times Staff Writer

Nationwide Insurance has won state approval to raise its rates an

average

of 21 percent on homeowners' policies and 25 percent for mobile

homes.

The increase - the latest in a string of hits to Florida homeowners

since last

year's hurricanes - will go into effect starting in September. It

marks the

second double-digit rate hike by the fourth-largest homeowners

insurance

company in a little over a year.

" It's a challenging environment in the state of Florida right now, "

Nationwide spokesman Joe Case said Tuesday. " We'll continue to move

forward and do our best to get through the various challenges the

marketplace presents. "

Nationwide has about 300,000 homeowners policies across Florida. No

single policy will go up by more than 37.5 percent, under a cap that

the

insurer agreed to set.

Floridians have long been suffering from soaring homeowners'

premiums,

driven by factors such as escalating home prices, mold, sinkhole

worries

and, of course, hurricanes. Homeowners insurance is up 49 percent

since

1999, not including any of the double-digit hikes that have hit

policyholders

this year.

The latest boost from Nationwide could have been worse.

Six months ago, the Florida unit of Columbus, Ohio-based Nationwide

sought permission to double its average premiums for mobile homes

and

increase single-family home policies an average of 28 percent.

Hundreds of Nationwide policyholders protested the mobile home hike

at a

public hearing, held in Clearwater because Pinellas County has the

largest

concentration of Nationwide's 5,500 mobile home policies statewide.

A

separate homeowners insurance hearing was held in West Palm Beach.

Even among a flurry of requests for rate increases over the past

year,

Nationwide's stood out. That's because in the spring of 2004,

shortly

before the hurricanes struck, Nationwide received approval for an

average

increase of 19.8 percent on homeowners' polices and 21.5 percent on

mobile homes.

Florida Chief Financial Officer Tom Gallagher blasted Nationwide in

January, when it pushed forward with the second huge increase while

Florida was still cleaning up after the hurricanes of last summer.

" Homeowners who have suffered losses from the four back-to-back

storms should not be victimized a second time, " Gallagher said at a

time.

His comments triggered Florida Insurance Commissioner McCarty

to impose a voluntary moratorium for property insurers to refrain

from

filing for rate increases while the state Legislature considered

fixes to the

market.

Since the moratorium was lifted last month, a half-dozen homeowners

insurance companies have filed for double-digit rate hikes.

Two weeks ago, Allstate, the second-largest homeowners insurer in

Florida, partially backed off a plan to bypass a regulatory review

and raise

rates an average of 28 percent. In a compromise with state

regulators, it is

raising rates statewide an average of 9.9 percent immediately and

seeking

the balance of the double-digit hike after a public hearing.

" Clearly, Florida has the most difficult property insurance market

in the

country, " said Deb Clouser, a spokeswoman for Allstate Floridian,

which

has about 750,000 customers. " We have the largest catastrophe

exposures

in the country. "

State Farm, Florida's largest home insurer with about 950,000

customers,

was granted a 5 percent average rate increase last December.

Spokesman

Tom Hagerty has repeatedly said there has been no decision yet on

future

rate increases.

Earlier, Gallagher had accused Nationwide and other insurers of

trying to

recoup their losses from the hurricanes or of raising rates so high

policyholders are forced to drop coverage.

Nationwide's Case insisted Tuesday that isn't happening.

" The rate we requested is based on the future risk that we determine

is out

there for our Florida customers, " he said. " It is not an attempt to

recoup

past losses. "

The increase will cover rising reinsurance rates and the likelihood

of future

losses based on computer modeling, he said.

Case said a county-by-county breakdown of average rate increases is

not

available, in part because employees who would be crunching those

numbers are still preoccupied with the aftermath of Hurricane Dennis.

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