State gives property insurers bigger rate hike than they asked for

The approval was based on extensive consultations between regulators and the insurance companies

State gives property insurers bigger rate hike than they asked for

Insurance News

By Allie Sanchez

The abuse of the assignment of benefits (AOB) privilege in Florida may have finally boomeranged on the state’s residents.

Due to the steep losses incurred by property insurers over the past several years, mainly from the proliferation of such abuses, the state’s insurance regulators approved rate hikes higher than those filed by companies.

Two companies got notice that their filings were approved beyond the rate hike they proposed. Deerfield Beach-based People’s Trust Insurance asked for a 14.5% hike but instead got approval for 16%; Tampa-based Homeowners Choice Property & Casualty was told to increase rates by 8% following its 3.3% proposal.

The Florida Sun Sentinel reported that the two property insurers were advised of the rate increases following extensive consultation with the insurance department’s actuaries, who determined that the higher rates were needed to cope with the rampant abuses on the state’s property insurance system.

The state “has an obligation to approve rates that are [financially] sound — which may be more or less than what a company requests,” Sha’Ron James, the state’s insurance consumer advocate, told the Sun Sentinel.  James was not involved in the rate hike approvals.

“I’m not happy about this,” Homeowners Choice CEO Paresh Patel told the Sun Sentinel Tuesday. “I wish we didn’t have to do it.”

“Because those are statewide average increases, South Florida customers can expect even higher rates. That’s because most companies that do business here say tri-county customers on average submit more claims and report steeper losses. To address the higher risk, companies are allowed to charge more here,” Sun Sentinel reporter Ron Hurtibise said in his report.

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