Good Neighbor? State Farm Bills Hold Sticker Shock
MIAMI (CBS4) – I am a television news reporter, homeowner, and customer of State Farm Insurance.
If you looked up “slack-jawed” in the dictionary, you would see a picture of me when I opened the premium notice I got in the mail from State Farm a few days ago.
My home insurance bill for the coming year, totaling $1,579.92, represents a 36 percent increase over last year.
My State Farm policy excludes windstorm coverage. I pay Citizens Property Insurance about a billion dollars a year for windstorm, but that’s another story.
My State Farm policy, that covers me only for fire, theft and sundry other stuff, would have increased even more this year but I got a discount for never having a claim. If I had actually used my insurance coverage my premium this year would have increased 44 percent.
What’s going on here?
I called State Farm’s corporate office in Bloomington, IL and a spokesperson there referred me to a spokesperson in Tallahassee who referred me to Chris Neal, a spokesperson in Winter Haven.
Neal acknowledged that yes, there has not been a major hurricane to strike Florida in more than five years, but said the company has “experienced heavy claims” from casualties of other sorts. He singled out sinkholes as being particularly pesky.
I don’t know about you, but I haven’t seen an explosion of sinkholes in my neighborhood lately. Or houses burning down. Or people falling off their roofs and breaking their necks. Or burglars hauling valuables out front doors. But our State Farm premiums are exploding nonetheless.
Florida’s insurance commissioner, Kevin McCarty, said the average 18.8% premium increase that he approved for State Farm statewide reflects “both a rate need by the company as well as cost-drivers in the system.” The average increase is just that, as my bill demonstrates. In some places neighborhoods premiums have shot up 60 percent or more, indeed, have even doubled. Pity the folks in sinkhole country.
State Farm Insurance Companies in 2010 cleared $1.8 billion in pure profit. State Farm CEO, Ed Rust, Jr., was paid $10.2 million in 2010.
The insurance premium outlook for Florida homeowners promises to grow bleaker.
Governor Rick Scott late today signed a bill into law that critics say could cause premiums to double in the next few years and coverage to decline.
The legislature approved the controversial measure, Senate Bill 408, which permits insurance companies to pass a variety of expenses along to their customers without regulatory approval. Companies can pass on the cost of “reinsurance” premiums, even if they purchase the reinsurance from their own subsidiaries or parent companies. Supporters of the measure said it will shore up insurance companies and attract more competition to the Florida market.
The measure has fractured the Republican majority.
Mike Fasano, a Republican from New Port Richey, said the bill “virtually guarantees a 15 percent premium” hike annually for Florida policyholders, and has condemned the industry-friendly measure as “an onerous rate increase” for consumers.
Governor Scott signed the bill on the same day that an op-ed piece by Fasano, urging him to veto it, was published by CBS4’s news partner, The Miami Herald.
Scott will visit South Florida Tuesday night, attending a swearing-in ceremony for re-elected Sweetwater Mayor Manny Marono.