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Gallagher Blocks State Farm Rate Hikes on Homeowners, Owners of Condominiums and Apartment Buildings

6/27/2002

TALLAHASSEE - Florida Treasurer and Insurance Commissioner Tom Gallagher announced today that he has rejected requests by State Farm for both a 22 percent average rate increase on homeowners and a 132 percent rate hike for owners of condominiums and apartment buildings. Gallagher said the rate hikes on personal and commercial residential properties requested by the state's largest property insurer were both excessive and unjustified.

In denying the rate requests, Gallagher cited recent rate increases already being implemented by State Farm. In 2001, an arbitration panel granted State Farm a statewide average increase of 6.4 percent. Based on a recent trend in losses, the Department approved a 14.3 percent average increase in January of this year.

"State Farm proposed rates that are unwarranted and beyond reasonable," Gallagher said. "The price tag for homeowners is an additional $128 million a year in premiums, leaving some homeowners stuck with cumulative increases as high as 125 percent. Double-dipping for rates in the same year is inexcusable. Homeowners need to be protected against excessive rate hikes."

In addition, State Farm raised its rates last year for commercial residential risks an average of 17.5 percent statewide, effective October 15, 2001 for new business and December 15, 2001 for renewal policies. The cost associated with the proposed 132 percent average rate hike represents an additional $29 million in premiums.

State Farm has 21 days to appeal Gallagher's decision and can either request a hearing before a three-member arbitration panel or pursue a hearing before an administrative law judge with the state's Division of Administrative Hearings (DOAH).