Nationwide Won't Renew 25,000 Policies
Beatrice E. Garcia
Miami Herald
Mar 8, 2007
Nationwide Insurance of Florida, the fourth-largest home insurer in the state, has resumed sending notices to about 25,000 clients that it will not renew their policies.
These policy cancellations are part of a plan the company put in place in September 2005, when it announced that it would drop about 35,000 policies. The nonrenewals began last March.
Nationwide has nearly 48,000 policies in South Florida, with about 232,000 statewide as of Dec. 31. Joe Case, a Nationwide spokesman, said Thursday that the insurer is continuing to negotiate with the Office of Insurance Regulation, which didn't accept its filing to reduce its rates by 4.5 percent.
The reduction was based on its expected savings for buying back-up insurance from the state's catastrophe fund. Regulators rejected it because it didn't contain the needed information. OIR has yet to review the application.
Nationwide's planned 4.5 percent rate cut was far lower than the average 24 percent decrease state regulators had figured last week. The savings are determined by the amount of reinsurance an insurer purchases from the Florida Hurricane Catastrophe Fund.
The state's CAT fund was expanded to make extra reinsurance available to private companies operating in Florida as part of the massive insurance reform bill passed by lawmakers in January.
As a condition of buying extra lower-cost coverage from the CAT fund, insurers are required to pass their savings onto policyholders.
An emergency order issued by the Gov. Charlie Crist and the Florida Cabinet prevents insuerers from canceling or non-renewing policies until May 1. But once insurers meet the March 15 deadline for filings its planned rate reductions, they're allowed to continue with plans to reduce the number of policies they have in force in Florida, especially if they've needed to reduce exposure to remain financially solvent.
Nationwide, the Florida-only unit of Columbus, Ohio-based Nationwide Mutual Insurance, hasn't been writing new policies since September 2005.
The company also no longer provides coverage for mobile homes and residential buildings such as rental apartments and condominium associations, which eliminated some 12,000 policies.
Case said Nationwide's filing for a much smaller rate cut takes into account that its current rates don't really reflect the sharp increase in reinsurance rates that impacted many insurers in 2006. Its last approved rate increase was 21 percent, granted in July 2005.
Last July, Nationwide filed a 71.4 percent average statewide rate increase, citing higher costs for reinsurance, building materials and labor. The request was rejected by regulators.
The company appealed and asked for an arbitration panel to review its filing. The arbitration hearing is set to begin next Monday.
"We believe our rate filing reflects the true cost of doing business in Florida," Case said.