Company Reports Compliance With HB1A Resulting in Lower Rates
COLUMBUS, Ohio--(Business Wire)--
Nationwide Insurance Company of Florida's (NICOF) president today
told the Florida Senate Select Committee on Property Insurance
Accountability that the company has complied with House Bill 1A. The
Florida Legislature enacted the bill in 2007 to lower property
insurance rates for Florida policyholders. The Select Committee is
holding public hearings to explore compliance with the new law.
Nationwide received an approval letter from the Florida Office of
Insurance Regulation in October 2007 after the company filed a 16.1
percent "true up" decrease under the legislation.
"Without House Bill 1A, the average Nationwide homeowner customer
in Florida would pay an average $448 more on their insurance premiums
this year. Those are real dollars that will stay in the customer's
pocketbook," said Jeff Rommel, regional vice president of Nationwide's
Florida operations, and president of Nationwide Insurance Company of
Florida.
While an arbitration panel awarded NICOF a 54 percent rate
increase in March 2007, the company's implementation of HB1A
(including the 16.1 percent "true up") lowered the final increase to
21.3 percent. Since NICOF had not received a rate increase since 2005,
the result was an average increase of just over 10.5 percent per year
for 2006 and 2007. In fifty-five of 67 counties in Florida, NICOF
customers now have rates lower than the industry average.
With regard to the ratemaking process, Rommel emphasized that
state law requires Florida homeowner rates be based on Florida risks
and that insurance companies are prohibited from using profits from
one state to subsidize rates in another.
"We don't factor into Florida rates the $100 million Nationwide
paid for California wildfires in 2007, or the $300 million in
non-Florida Katrina claims from 2005," Rommel said. "We don't factor
into Florida rates Iowa fender benders or Pennsylvania home fires. And
we don't factor Florida's hurricanes or home fires into the rates of
those states."
Rommel also corrected inaccurate assumptions that auto insurance
profits in Florida are more than making up for homeowner losses.
"Simply put, those assumptions are not valid," Rommel insisted.
"Since 1988, Nationwide in Florida has lost more than $300 million in
homeowners. When we factor in our auto results, the combined loss for
both lines in Florida is more than $150 million. While we have made
some money on auto, it does not offset homeowner losses."
He also acknowledged the frustration expressed by lawmakers and
customers and reemphasized Nationwide's commitment to help find
answers to the unique challenges facing the Florida insurance market.
"We don't take this lightly," Rommel added. "Nationwiders are
burning the midnight oil to find solutions. It is my hope we can work
together with this body and others to find answers that best serve the
needs of Florida consumers."
Nationwide Insurance employs more than 1,400 Florida residents and
has 245 agents that serve more than 500,000 customers in the state.
The company has served the state of Florida since 1955. Nationwide
Insurance Company of Florida paid more than $1 billion in claims
related to the 2004 and 2005 hurricane seasons. NICOF has lost more
than $300 million since its inception in 2000.
Nationwide and the Nationwide Framework are federally registered
service marks of Nationwide Mutual Insurance Company. On Your Side is
a service mark of Nationwide Mutual Insurance Company.
Nationwide
Joe Case, 937-243-0442
casej6@nationwide.com
or
Nancy Smeltzer, 614-249-4491
smeltzn@nationwide.com
Copyright Business Wire 2008
