Florida Insurance Commissioner Tells State Farm "NO"!
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State Farm wanted to raise homeowner’s premiums to cover losses from hurricanes by more than 47 percent. Monday, the state insurance commissioner told the insurance giant “No!”
This is not the first time they’ve been turned down. State Farm appealed when Insurance Commissioner Kevin McCarty denied the increase initially. An administrative law judge also turned them down and sent the hike back to McCarty.
That was bad news for the state’s second largest property insurer, which about this time is thinking that Florida is not such a good bet, especially since hurricane season begins in June.
Look for State Farm to take an appeal to the 1st District Court of Appeals for another decision.
The other option State Farm is considering is canceling the bulk of the 845,000 property policies in the state it holds.
No doubt, profits and investments for insurance giants were substantially reduced in the first nine months of 2008 to about $4 billion, compared to $50 billion during the first nine months of 2007.
The 92 percent drop was blamed on bad investments and catastrophic losses, according to the industry’s Insurance Services Office (ISO).
But in the American Association for Justice’s "Tricks of the Trade" report on Big Insurance reminds us it is a profit industry.
With assets totaling $3.8 trillion over the last ten years, the property casualty industry has averaged profits of over $30 billion a year. The life and health insurance industry another $30 billion annually. The CEOs of the Top Ten property casualty firms earned an average of nearly $9 million in 2007.
Americans are highly sensitive to bailouts for the "free market" campaigners who enjoyed record profits in their pockets when business was good, and have their hands out to consumers who can ill afford more cost now when business is bad.
Does the old adage about saving for a rainy day apply here?