Gallagher turns down State Farm rate hike

[Guest guest]

http://www.tallahassee.com/mld/democrat/news/nation/3559833.htm

Fri, Jun. 28, 2002

Gallagher turns down State Farm rate hike

By Hanks III

KNIGHT RIDDER TRIBUNE

MIAMI - Insurance Commissioner Tom Gallagher rejected a 22-percent rate

increase by the state's largest homeowners insurance company Thursday,

declaring State Farm Florida's proposal " inexcusable " on the heels of a

14-percent hike in January.

A company spokesman said State Farm will appeal the decision, Gallagher's

first veto of a rate increase since being elected to the joint post of

insurance commissioner and state treasurer in November 2000.

The new rates would mean premium hikes closer to 30 percent for

hurricane-prone South Florida, and they resemble a request made by the

state's second-largest residential insurer, Allstate Floridian.

Gallagher has not ruled on that proposal, but in rejecting the State Farm

rates, he has signaled his willingness for a high-profile tangle with the

insurance industry as he runs for another Cabinet post.

State Farm also proposed a 132-percent rate increase on policies covering

condominiums and apartment buildings in Florida, and Gallagher rejected that

plan, too. The state Insurance Department said State Farm raised rates for

commercial residential buildings 17 percent last year.

Insurance premiums are rising across the country in the face of what

industry officials say are increased claims, weakening profits and new risks

to cover, from mold contamination to terrorist attacks.

Too many claims

State Farm insures 980,000 Florida homes and maintains that claims are

increasing too quickly for it to sustain current premiums. Spokesman Tom

Hagerty said rising building costs, sinkhole and mold claims, labor costs

and medical expenses have forced State Farm to charge more for homeowners

policies.

Gallagher approved a 14-percent increase for State Farm in January, which

came nine months after an arbitration panel approved the company's request

to raise premiums 6 percent. Gallagher's predecessor, Bill , had

rejected the 6-percent hike in 2000, one of a series of vetoes leading up to

the Democrat's successful run for the U.S. Senate.

When Gallagher ends his two-year term in January, the insurance commissioner

will revert to an appointed position. Gallagher, a Republican, is running

for the newly created post of chief financial officer, and an industry

official labeled his State Farm announcement as predictable politics.

" It shouldn't be a surprise to anyone if Gallagher is denying these rate

increases in the months leading up to the election, " said Stander, a

lobbyist in Tallahassee for the Alliance of American Insurers.