Regulators to question State Farm executives about the proposed increase at public hearing.
State Farm, the largest private property insurer in Florida, is to ask for a 47% increase in rates, according to a report in The Tampa Tribune. The rate increase is to requested at a public hearing in Tallahassee, Florida, USA, today.
Regulators will question State Farm executives about the proposed increase, and the public will have a chance to raise questions.
If the rate increase is not granted, State Farm could reduce its insurance offered in Florida, deepening the ongoing property insurance crisis in the state.
State Farm and other insurers have argued that rates are not high enough to cover catastrophic claims that would result from a major hurricane hitting Florida.
"Insurers do not file rate requests unless they believe there's an actual and demonstrable need," said Robert Hartwig, chief economist for the Insurance Information Institute. "To minimise the probability of ruin to a number in the vicinity of one-in-250 years is completely reasonable, given its fiduciary responsibility," Hartwig said. "It's completely acceptable for the state-run insurer to go bankrupt because they can effectively tax everybody in the whole state. That cannot happen with a company like State Farm, which has millions of policyholders all over the country."
State Farm has more than $9bn in reinsurance coverage.