July 14, 2005

Nationwide Insurance has won state approval to raise its rates an average of 21 percent on homeowners' policies and 25 percent for mobile homes.

The increase - the latest in a string of hits to Florida homeowners since last year's hurricanes - will go into effect starting in September. It marks the second double-digit rate hike by the fourth-largest homeowners insurance company in a little over a year.

"It's a challenging environment in the state of Florida right now," Nationwide spokesman Joe Case said Tuesday. "We'll continue to move forward and do our best to get through the various challenges the marketplace presents."

Nationwide has about 300,000 homeowners policies across Florida. No single policy will go up by more than 37.5 percent, under a cap that the insurer agreed to set.

Floridians have long been suffering from soaring homeowners' premiums, driven by factors such as escalating home prices, mold, sinkhole worries and, of course, hurricanes. Homeowners insurance is up 49 percent since 1999, not including any of the double-digit hikes that have hit policyholders this year.

The latest boost from Nationwide could have been worse.

Six months ago, the Florida unit of Columbus, Ohio-based Nationwide sought permission to double its average premiums for mobile homes and increase single-family home policies an average of 28 percent.

Hundreds of Nationwide policyholders protested the mobile home hike at a public hearing, held in Clearwater because Pinellas County has the largest concentration of Nationwide's 5,500 mobile home policies statewide. A separate homeowners insurance hearing was held in West Palm Beach.

Even among a flurry of requests for rate increases over the past year, Nationwide's stood out. That's because in the spring of 2004, shortly before the hurricanes struck, Nationwide received approval for an average increase of 19.8 percent on homeowners' polices and 21.5 percent on mobile homes.

Florida Chief Financial Officer Tom Gallagher blasted Nationwide in January, when it pushed forward with the second huge increase while Florida was still cleaning up after the hurricanes of last summer.

"Homeowners who have suffered losses from the four back-to-back storms should not be victimized a second time," Gallagher said at a time.

His comments triggered Florida Insurance Commissioner Kevin McCarty to impose a voluntary moratorium for property insurers to refrain from filing for rate increases while the state Legislature considered fixes to the market.

Since the moratorium was lifted last month, a half-dozen homeowners insurance companies have filed for double-digit rate hikes.

Two weeks ago, Allstate, the second-largest homeowners insurer in Florida, partially backed off a plan to bypass a regulatory review and raise rates an average of 28 percent. In a compromise with state regulators, it is raising rates statewide an average of 9.9 percent immediately and seeking the balance of the double-digit hike after a public hearing.

"Clearly, Florida has the most difficult property insurance market in the country," said Deb Clouser, a spokeswoman for Allstate Floridian, which has about 750,000 customers. "We have the largest catastrophe exposures in the country."

State Farm, Florida's largest home insurer with about 950,000 customers, was granted a 5 percent average rate increase last December. Spokesman Tom Hagerty has repeatedly said there has been no decision yet on future rate increases.

Earlier, Gallagher had accused Nationwide and other insurers of trying to recoup their losses from the hurricanes or of raising rates so high policyholders are forced to drop coverage.

Nationwide's Case insisted Tuesday that isn't happening.

"The rate we requested is based on the future risk that we determine is out there for our Florida customers," he said. "It is not an attempt to recoup past losses."

The increase will cover rising reinsurance rates and the likelihood of future losses based on computer modeling, he said.

Case said a county-by-county breakdown of average rate increases is not available, in part because employees who would be crunching those numbers are still preoccupied with the aftermath of Hurricane Dennis.