Office Of Insurance Regulation Denies Florida Farm Bureau’s Request For Rate Increase
TALLAHASSEE - Florida Insurance Commissioner Kevin McCarty announced today that the Office of Insurance Regulation is denying Florida Farm Bureau's request to raise its rates by 30.3 percent. After receiving testimony from the company in a public hearing last week, and reviewing all previously submitted data seeking to justify the increase, the Office sent Florida Farm Bureau a Notice of Intent to disapprove the increase.
"What we discovered from the testimony at the hearing was that the company made a business decision to reinvest $6 million in added reinsurance rather than passing the savings on to their policyholders," McCarty said. Reinsurance is the insurance that companies buy to cover extreme losses.
"The intent of the law that came out of the January special legislative session was to give companies less expensive reinsurance from the state and to pass on that savings to their policyholders," McCarty added, "and Florida Farm Bureau's actions are clearly contrary to the intent of that law."
Another aspect of the special session legislation was a mandate that companies file with the Office their expected savings from getting less expensive reinsurance from the state. These presumed savings filings were submitted in March and since then, companies have negotiated reinsurance contracts for the 2007 hurricane season. They are required to make a second filing by September 30 indicating how close they were to their initial presumed savings. Florida Farm Bureau's March filing was an anticipated decrease of 24.9 percent. On May 10 however, they made a second filing requesting an increase of 30.3 percent.