Nationwide Asks To Raise Rates 70%

By RANDY DIAMOND The Tampa Tribune

Published: Jul 6, 2006

TAMPA - The Nationwide Insurance Company of Florida announced Wednesday that it plans to seek state approval to raise property insurance rates by an average of 71.4 percent.

The move makes Nationwide the latest big property insurer to insist that higher premiums are necessary for it to operate profitably in the hurricane-prone state.

Nationwide, the fourth largest homeowner insurer in Florida, said it wants the rate increase for its 240,000 policyholders to kick in starting Nov. 10. Nationwide's proposed rate increase first must get approval from the Florida Office of Insurance Regulation.

"While this decision is difficult, we have an obligation to ensure our homeowner rates are adequate so we can maintain long-term viability for our Florida customers and customers across the country," said Jeff Rommel, Nationwide's regional vice president of Florida operations, in a statement. "The majority of this rate adjustment will cover rising reinsurance costs and the rising costs of building materials and labor."

Nationwide's rate announcement came on the same day that Tom Gallagher, Florida's chief financial officer, disclosed that Florida Select Insurance Co. had been seized by the state and ordered into rehabilitation. That means state officials will oversee the day-to-day operations of the company and try to ensure the company does not fail.

Florida Select is based in Sarasota and has 70,000 policyholders statewide. State officials could not immediately say how many policies the company holds in the Tampa Bay area.

Tami Torres, a spokeswoman for Gallagher, said Florida Select had unable to find new reinsurance to adequately support the number of policyholders it covered. The state did not disclose how much reinsurance Florida Select had. Reinsurance is coverage that insurance companies buy to shed some of its risk against major losses.

Torres said regulators are reviewing the financial condition of the company as it continues to search for more reinsurance coverage.

Jeff Grady, president of the Florida Association of Insurance Agents, said the latest announcements are more evidence of the upheaval still roiling Florida's insurance industry after two active hurricane seasons. The hurricane season started June 1.

"We are a troubled market in need of a big solution and fast," he said.

The Florida Select seizure comes on the heels of the state seizing and liquidating three insurance companies - Southern Family Insurance, Atlantic Preferred Insurance and Southern Family Insurance - all controlled by Poe Financial Group, based in Tampa.

Nationwide's proposed rate increases will vary, depending on a property's location and other risk factors, Nationwide spokesman Joe Case said. In Hillsborough County, policyholders would see rate increases from 43 percent to 91 percent. The company is proposing rate increases from 42 percent to 48 percent in Pinellas County, and from 12 percent to 40 percent in Pasco County.

Nationwide announced it was shedding 35,000 policyholders in August and that it would not write any new homeowner insurance policies in Florida. Case said the proposed rate increases won't affect the company's decision to drop some customers and not take on new ones.

Less than two months ago, The State Farm Florida Insurance Co., Florida's second largest insurer, announced it had filed with regulators for rate increases averaging 71 percent.

Citizens Insurance Property Corp., the state's largest insurer, has received approval for a 40 percent increase for policyholders in wind-pool areas, considered hurricane-prone by the state, and an average of 25 percent for other policyholders. Those increases are expected to be greater - 100 percent or higher in parts of Pasco and Hernando counties. Most increases will hit policyholders renewing after Sept. 1.

Reporter Randy Diamond can be reached at (813) 259-8144 or rdiamond@tampatrib.com.