Naples, FL - Across the state, homeowners are feeling the pain of higher home insurance rates. In Southwest Florida, some State Farm policy holders have seen their rates increase by more than 40 percent this year. While the state’s largest private insurance carrier got state approval to raise rates by an average of 14.8 percent in December, some homeowners have seen much bigger increases. That’s because the increase is a statewide average and State Farm also has dropped its voluntary discounts for customers with no claims, multiple policies, and burglar or smoke alarms. 

Since January, the state’s Office of Insurance Regulation has approved 140 rate increases for homeowners insurance, with some of less than 1 percent and an average of 29 percent. The state received more requests for rate hikes, but regulators rejected some of them. More carriers are seeking increases, including Allstate’s two Florida subsidiaries, Castle Key Insurance and Castle Key Indemnity. Castle Key Insurance seeks an average rate hike of 33 percent, while Castle Key Indemnity wants an average increase of 18 percent. Royal Palm Insurance Co., which only writes policies in Florida, is asking for an average increase of 21.7 percent. 

Meanwhile, the state-run carrier, Citizens Property Insurance Corp., wants to raise its rates. Last month, its board voted unanimously in favor of an average 8.4 percent hike for all of its lines of business, which still must be approved by the state’s Office of Insurance Regulation. Citizens is the state’s largest carrier, with more than 1 million policies. At the end of last year, Citizens had 18,614 policies in Collier. It had more than 46,000 in Lee. Citizens’ leaders say their current rates aren’t high enough to cover their costs. Its policies have grown during the past year as other private carriers in Florida have dropped customers, and it has seen a dramatic rise in payouts for fires, sinkholes and other disasters, not related to hurricanes. 

Private insurers in Florida have argued they’ve been unable to keep up with the rising costs of reinsurance and covering claims. Insurers carry reinsurance to protect themselves from huge claims. Insurers have seen more fraud and are getting more claims for more money. “People aren’t as willing or can’t pay out of pocket because times are harder, whereas in the past maybe they would have paid out of pocket instead of going through the claims process,” said Brittany Benner, a spokeswoman for the Florida Office of Insurance Regulation. 

Insurers have been able to justify their need to raise rates to regulators. “Castle Key has not received a significant rate increase in several years,” said Amy Moore, a spokeswoman for Allstate in Florida. “We need to maintain adequate capital to remain strong and positioned to deliver on our promise to customers. 

Losses and expenses have exceeded premium and this is projected to continue without a rate increase.” If the requested rate increases are approved, on average Castle Key Insurance’s policyholders would pay $412 more a year, or $34 a month. Castle Key Indemnity’s policyholders would pay an average of $243 more a year, or $20 a month. “Those are average increases, so they can vary and actually it does vary quite significantly. Some portions of the state could see upward of 50 percent increases if they’re approved,” Benner said. Statewide, the Castle Key companies have about 250,000 policies. At the end of last year, they had more than 6,300 policies in Lee County and more than 3,400 in Collier. “We are currently writing new business in Castle Key Indemnity, which accounts for approximately 27 percent of our homeowner policies,” Moore said. 

Royal Palm’s rate increase is for its fire/dwelling line of insurance, which is more for structures, Benner said. So it wouldn’t have as wide of an impact, affecting about 16,000 Floridians, she said. “It’s not like your full-blown homeowners insurance,” Benner said. Public hearings are required when property and casualty insurers ask for a rate hike of 15 percent or more. Insurers have to justify their requests and back it up with data. Royal Palm’s public rate hearing was Aug. 5. The hearings for the Castle Key companies were held in July. The Office of Insurance Regulation has 90 days to decide whether to approve a requested rate increase once it’s filed. In some cases, lower rate increases can be approved based on the data provided by the company to regulators. 

That’s what happened in the case of State Farm. In December, State Farm struck a deal with state regulators that allowed the carrier to raise its rates an average of 14.8 percent on home and condominium owners. Up to 125,000 nonrenewals were part of the deal. As part of the compromise, State Farm agreed not to pull out of the property insurance market in Florida. The company threatened to leave the state after its proposal for a more than a 47 percent rate increase – which it said was needed to remain financially sound – was rejected by regulators. Sean Michael Shaw, Florida’s Insurance Consumer Advocate, said the rate increases sought by the Castle Key companies and Royal Palm are too high and can’t be justified. “We do our own analysis,” he said. He said Castle Key’s requests should be 10 percent to 20 percent less than what they’ve asked for and he challenges their calculations used to show their risks. “It’s kind of hard for consumers to understand,” Shaw said. “We haven’t had a storm and companies want double-digit rate increases.” Such huge increases are a big issue for homeowners, especially in these tough economic times. “It’s very tough and people can’t afford these rate increases,” Shaw said. “My office has to make sure we are looking at everything with a fine-tooth comb and that insurers are asking for what they need and maybe not what they want.” Jack Powers, a senior vice president of sales for Gulfshore Insurance in Naples, said coastal areas, such as Southwest Florida, have seen higher rate increases because the risks of damage from hurricanes is so much greater. When rates rise, his agents get more calls from customers, looking to switch to a less expensive carrier or to change their coverage so they can reduce their costs. 

With home values dropping in Southwest Florida, some want to reduce their coverage to the market value so they can cut their premiums, but Powers said that’s not a good idea. The coverage amount should be the replacement value _ the amount needed to rebuild a home, he said. After the elections in November, Powers expects to see more rate hikes going forward. “We are going to see a new governor and a new insurance commissioner and I think that probably is going to mean an approval of higher rates to keep companies from leaving the state in order to provide a better market and also to attract new carriers in the state,” he said.