TALLAHASSEE — State regulators Thursday approved a slate of requests from State Farm Florida Insurance Co. that will raise premiums for homeowners by an average of 28.4 percent.
But the rate increases will target only those customers who now benefit from a handful of voluntary discounts now offered by State Farm including premium breaks for policyholders who also insure their cars with the company, have a home security system or have not filed a claim in several years.
The decision by the Office of Insurance Regulation, agency officials say, would result in additional premiums of $278 million for the company after all homeowners policies come up for renewals beginning Dec. 1. The company now insures about 700,000 policyholders.
State insurance regulators, however, rejected a company request to reduce premium discounts it is required to offer customers who hurricane-proof their homes, saying the company must provide additional data before regulators will be willing to agree.
“They need to do some more work on that piece,” said Belinda Miller, OIR deputy commissioner.
State lawmakers recently enacted legislation requiring insurers to offer premium discounts for homes that are better able to withstand hurricane force winds. To change the discount, companies must provide a detailed study showing that different discount rates are more appropriate.
“State Farm ran a model but did not have what we considered to be a detailed alternative study,” Miller said.
State Farm and Florida regulators are in the process of negotiating a two-year exit plan.
Unable to obtain the premium increases it says it needs, the company in January said it would leave the state’s property insurance market over a two-year period once an acceptable withdrawal plan was approved.
State Farm has long offered discounts as a marketing tool. The discounts are voluntary, but must still be approved by OIR. The agency is also required to sign off if those discounts are discontinued, even though regulators have little or no authority to block the decision.
A company spokesman said the move is necessary as the company responds to market conditions and its inability earlier this year to convince regulators that higher premiums are needed.
“Right now what we’re focusing on is developing a plan to provide a soft landing for our customers and to allow them to continue to work through their agents,” said Justin Glover, a State Farm spokesman.