Louisiana Insurance Commissioner Jim Donelon has denied a request by State Farm Fire and Casualty Company to increase insurance rates by 16.6 percent across the state, according to a release from the Department of Insurance. The denial comes shortly after Donelon turned down a proposal by State Farm that would have allowed the insurer to raise its deductibles in...
Louisiana Insurance Commissioner Jim Donelon has denied a request by State Farm Fire and Casualty Company to increase insurance rates by 16.6 percent across the state, according to a release from the Department of Insurance. The denial comes shortly after Donelon turned down a proposal by State Farm that would have allowed the insurer to raise its deductibles in some parishes.
Insurance Commissioner Jim Donelon
State Farm is the largest insurer in Louisiana. Its roughly 300,000 policies account for about 28 percent of all the homeowners' policies in the state, according to the Department of Insurance.
In an emailed statement, Donelon said he turned down the company's requested rate increase because it was not "actuarially justified." The increase would have amounted to about $71.3 million in additional premiums for State Farm, according to the department.
The commissioner noted that last February, the department permitted the company to increase its premiums by 7.8 percent after turning down an initial request to raise rates by 14.3 percent.
State Farm spokesman Gary Stephenson said by email that the "rate need is a real one," citing the threat of severe damage in coastal parishes as well as more common concerns like thunderstorms, hail and fire.
"Our customers expect State Farm to be strong and able to handle their covered claims when that time comes. That requires that we be responsible in balancing premium with claims costs, and risk, as we look forward."
The rejection of the premium increase request comes weeks after Donelon denied another State Farm proposal, which would have allowed it to increase deductibles in some parishes and lower premiums for those customers.
Donelon said that denial came, in part, because the insurer did not show it intended to write more policies in those parishes, a necessary part of what are known as "regional deductible plans." Stephenson said the plan was necessary so that the insurers customers in northern Louisiana and elsewhere in the country do not have to pay for the risks of those living near the coast.