State Farm Raising Louisiana Homeowner Insurance Rates
October 3, 2013
State Farm is raising Louisiana homeowner rates an average of 8.7 percent statewide for its nearly 308,000 policyholders.
According to State Farm’s filing with the insurance department, the statewide increase will generate $40.1 million.
The Advocate reports the higher rates are already in effect for new customers. Existing customers who are renewing their policies will see the increases starting Nov. 1.
Rates also will increase for condo owners and renters. The increases vary statewide. In general, customers in coastal areas, where the risk of hurricane damage is greater, see higher rates.
State Farm, the state’s largest insurer with 30 percent of the homeowners market, asked for a 16.6 percent increase in November 2012.
Insurance Commissioner Jim Donelon rejected that request in January. Among other things, Donelon questioned the amount of profit built into the rates as well as the estimated cost of reinsurance, the insurance that insurance companies buy to protect themselves against excessive claims.
In April, State Farm refiled. Donelon said State Farm’s analysis showed the company needed to increase rates by 24.4 percent, but the company asked for 15.2 percent.
The Insurance Department found that only an 8.7 percent increase was actuarially justified, he said.
State Farm spokesman Gary Stephenson said he could not discuss the specifics of the rate filing.
State Farm has paid billions in storm-related claims to tens of thousands of Louisiana customers over the past 10 years, and the company knows more storms will occur in the future, Stephenson said.
The company has to achieve adequate rates to ensure its long-term strength and business viability, he said. The company was disappointed that it didn’t get the rates needed in the previous filing but will continue to work with the Insurance Department.
Insurance Department records show State Farm has increased homeowner’s rates by an average of more than 36 percent since 2008.
State Farm customers in East Baton Rouge Parish will see rates increase an average of 7.5 percent, according to the Louisiana Insurance Department.
In Lafayette, rates will rise 9.4 percent. In Orleans and Jefferson parishes, rates will go up an average of 9 percent.