Monday, 19 March 2007
Nationwide Insurance Balks at the "True Cost of Doing Business In Florida"
Nationwide Insurance will not renew more than 25,000 homeowners insurance policies in Florida. Nationwide is the fourth-largest insurer in Florida, with nearly 232,000 policies in force throughout the state. Almost 48,000 of its policies cover property in South Florida, where hurricane damage has scuttled many insurance companies’ profits — and pushed some into bankruptcy.
Meanwhile, Nationwide continues to negotiate with state regulators over a proposed rate reduction. To ease the financial burden on insurance companies and homeowners, the Florida state government expanded their Hurricane Catastrophe Fund. The Fund allows insurance companies to buy “reinsurance” that protects them against heavy losses from hurricanes — essentially sharing the financial risk of hurricanes with the government.
As part of the agreement to expand the fund, insurance companies are required to pass along the savings the Fund creates for them to their customers. Nationwide’s proposed rate reduction of 4% was far less than the average reduction of 24% that state regulators had expected.
“We believe our rate filing reflects the true cost of doing business in Florida,” said Nationwide spokesman Joe Case.
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