The Florida Office of Insurance Regulation (“OIR”) held a public rate hearing today, June 1, 2010 on the recent homeowners insurance rate filing by the Hartford Insurance Company of the Midwest (“Hartford”).  OIR Deputy Commissioner Belinda Miller, Deputy Director Michael Milnes, Actuary Ken Ritzenthaler and OIR Assistant General Counsel Stephen Thomas officiated the hearing.

Ms. Miller opened the hearing by noting it was not an adversarial proceeding, but rather, represented an opportunity for public testimony on the rate filing.

Hartford Florida Product Manager R. David Roach testified that his company has requested a 25 percent rate increase for new business, effective August 7, 2010.  Renewal rates would be effective September 29, 2010.  

According to Mr. Roach, the filing represents a rate less than what is needed, but was used by Hartford in its filing with the hope of securing the OIR’s approval. 

While the profit margin used in Hartford’s filing was slightly less than four percent, the company representatives indicated that an 11 percent profit margin would have been preferable, based on the risks of operating in Florida.   In determining its loss projections, Hartford used the Florida Public Hurricane Loss Projection Model.

Following the presentation by Mr. Roach, Mr. Ritzenthaler asked a series of questions related to the filing.  It was noted that the biggest rate changes are on HO-6 (i.e., condominium) policies. 

Hartford officials testified that a 63 percent rate increase actually was needed to achieve adequate rates, however, it was understood that this would likely not be approved.  The two primary cost drivers cited in the increase were profit load and the use of mid-term hurricane models.

Mr. Ritzenthaler asked another series of questions related to Hartford’s reinsurance cost exhibits.  Hartford officials noted that their costs are in line with industry standards.

By applying lower expense factors such as reinsurance and profit load, Mr.  Alexander provided an analysis of Hartford’s filing that alternately resulted in a rate of 14.2 percent, which he described as “reasonable.”

Actuary Steve Alexander and Senior Attorney Terry Butler attended today’s hearing on behalf of the Office of the Florida Insurance Consumer Advocate.

Following the presentations and brief conclusory remarks from Ms. Miller, the hearing adjourned.