Florida OIR Officially Says No to State Farm Request

Florida Insurance Commissioner Kevin McCarty has affirmed the ruling of an administrative law judge regarding the rate filing challenge between the Office of Insurance Regulation (Office) and State Farm Florida (State Farm). The commissioner’s Final Order officially disapproves the rate filing submitted by State Farm and adopts the judge’s findings of fact and some of his conclusions of law.

The matter was heard Oct. 27 – 30 at the Division of Administrative Hearings (DOAH), and a Recommended Order disapproving the rate filing was issued Dec. 12 by Administrative Law Judge Daniel Manry. The judge’s Recommended Order was based on his conclusion that: “State Farm Florida did not show by a preponderance of the evidence that either the indicated rate or requested rate in the rate filing is not excessive, inadequate, or unfairly discriminatory.”

In its July 16 rate filing, State Farm sought an overall average increase of 47.1 percent for homeowners insurance policies. During the DOAH proceeding, the company argued instead for what it said was its “indicated” rate need of 67.0 percent.

The 9 percent rate reduction that became effective in accordance with the Oct. 1, 2007 agreement remains in effect.

State Farm may appeal the Final Order to the District Court of Appeal within 30 days; but it still cannot implement the proposed rate increase, because Senate Bill 2860 prohibits companies from implementing rate increases through the "use and file" process, through Dec. 31, 2009.