Rebecca Mowbray reports State Farm will raise rates for mom-and-pop landlords, drop their wind coverage in today’s Times Picayune:
State Farm Fire and Casualty Co., the state’s largest residential insurer, is asking for an average 9.9 percent rate increase for homeowners coverage in Louisiana.
The filing with the Department of Insurance comes just over a month after Insurance Commissioner Jim Donelon rejected the company’s request for an average 19.1 percent rate hike. Donelon called that proposal unreasonable and unjustified.
State Farm received an average 8.3 percent increase last year in Louisiana after asking for 13.7 percent.
Although the average rate hike would be 9.9 percent, hurricane-vulnerable coastal areas would bear the brunt. The New Orleans region would see a 17.7 percent increase while rates in the Lake Charles region would go up 22.5 percent, said State Farm spokeswoman Brooke Cluse…
Cluse said the proposed rates are based on future loss projections and not past claims experience. She said that although State Farm believed its earlier rate increase request was justified, the company was trying to work with regulators to “move closer to adequate rates.”
What a game! Just how many coastal policyholder contracts for coverage did State Farm honor following Hurricane Katrina? Very few, according to the evidence of the multi-state scheme provided in the Rigsby qui tam complaint. What a waste of public resources to put an agency through the process of reviewing an inflated request just to make one “closer to adequate” appear a better deal!
In denying the earlier request, Donelon questioned State Farm’s use of a loss projection model that called for 150 percent higher loss provisions than projected by two other industry models. He said State Farm did not provide enough evidence to support the difference.
Donelon was not available for immediate comment Tuesday on the new request.
The filing, which would total $38.1 million for State Farm’s 301,000 policyholders, also includes a proposed 6.1 percent rate increase for condominium owners coverage and a 0.4 percent hike for rental coverage.
If granted, the higher rates would go into effect on May 1 for new policies and on July 1 for renewed policies.
What a knife in the economy of an area still recovering from the insurance industry’s “claims game” following Hurricane Katrina when it had to “bear the brunt” of the BP oil spill! Louisiana Insurance Commissioner, Jim Donelon, should deny State Farm’s request as a penalty for submitting bogus requests.