State Farm seeks average 9.9 percent rate hike on La. homeowner coverage, higher in some areasBy Alan Sayre, AP
Tuesday, March 30, 2010
State Farm wants rate increase on La. homes
NEW ORLEANS — 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.
Alexandria homeowners could expect a 5.5 percent increase. Rates in the Monroe and Baton Rouge areas would be unchanged, while the Shreveport-Bossier City area would see rates go down 6 percent.
The largest overall increase — 26 percent — would affect homeowners in St. James and St. John the Baptist parishes, including LaPlace. The largest overall decrease — 6.7 percent — would be seen in Assumption, Iberia, St. Charles and Vermilion parishes.
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.”
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.