State Farm Looking to Raise Auto Raises in Florida
State Farm said it is looking to raise automobile insurance rates in Florida by an overall statewide average of 9.2% effective in June, if approved.
State Farm, the top writer of private passenger auto insurance in Florida according to BestLink, which provides online access to a.M. Best’s Global Insurance & Banking Database, has requested a 9% increase for State Farm Mutual Automobile Insurance co. and an 11.8% increase for State Farm Fire and Casualty co. policyholders.
Michal Connolly, spokeswoman for State Farm, said the company filed for the rates on Feb. 2. Since 2005, auto rates charged by the insurer have decreased 1% but the costs related to claims are now rising, she said. Frequency and severity are both up with notable higher costs for personal injury protection, uninsured motorists and bodily injury liability, Connolly said.
“We have not observed any significant changes in the auto insurance marketplace in Florida, although recent rate filings have shown some indications of an upward trend in bodily injury expenses,” said Jack McDermott, Florida Office of Insurance Regulation spokesman.
According to the OIR, State Farm Mutual leads the list of personal auto writers in the Sunshine State with about $2.5 billion in premiums in 2008. State Farm Fire comes in 12th with about $204 million in premiums.
Nationally, auto insurance increased 4.5% in 2009 as costs for motor vehicle body work, health care and legal services all increases, according to the Bureau of Labor Statistic’s consumer price index.
About a year ago State Farm was looking to leave the Florida property insurance market but it always intended to stay in the Sunshine State to sell auto insurance. after lengthy negotiations, the insurer reached an agreement with regulators to stay and was permitted to raise rates 14.8% across-the-board for homeowners and condominium unit policies. State Farm is also permitted to nonrenew 125,000 policies. The insurer agreed to allow its agents to place affected policyholders with unaffiliated companies (BestWire, Dec. 17, 2009).
The top five writers of private passenger auto insurance in Florida in 2008, according to BestLink, were: State Farm Group, with a 21.9% market share; Berkshire Hathaway Insurance Group, with 14.5%; Allstate Insurance Group, with 14.1%; Progressive Insurance Group, with 10.7%; and USAA Group, with a 4.9% market share.
State Farm Group currently has a Best’s Financial Strength Rating of A++ (Superior). State Farm Mutual Automobile Insurance co. has the same rating. State Farm Fire and Casualty co. has a Best’s Financial Strength Rating of A+ (Superior).
(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)
State Farm Looking to Raise Auto Raises in Florida