Florida Insurance Regulators Reject Rate Hike by USAA

A rate hike by USAA, a company that insures military personnel, was rejected by the Florida insurance regulators. The company had been asking for a nearly 54% increase in premium rates. They said this was necessary to cover future losses. They also said that reinsurance (insurance that insurance companies buy to protect themselves from big losses) now cost more. I thought that the reforms put in place last winter were supposed to make reinsurance more available and cheaper. Go figure.

The rejection was partly due to the fact that the company officers had not certified that the information they had submitted was "true and accurate", as required by the Office of Insurance Regulation. Apparently in the past they could just shove figures at the state and then claim they were unaware of any errors in the data. Now they must attest under oath that the information they are giving is correct, or face perjury charges.

So this rejection may be based on a simple technicality. It will be interesting to see what the state allows them to do if they submit the request correctly. However, 54% is a huge increase and seems to fly in the fact of the insurance reforms that we were promised. Starting to look like business as usual, as far as insurance is concerned in Florida.

PS Dave Snowden of USAA has left a comment for this post with more information. Click on the comment link below to read what he had to say.

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Comments

[Dave Snowden]

Hi, I work in communications at USAA.

Just to clarify the situation in Florida: On Friday, Oct. 5, Florida insurance regulators abruptly cancelled a scheduled hearing to review a proposed rate increase by USAA. Regulators rejected USAA’s request based on a technical concern about the rate filing. USAA contends, however, that the rate filing was in fact complete and the hearing should have gone forward.

In July of 2007, USAA filed for a rate increase with the Florida Office of Insurance Regulation. USAA followed all procedures proscribed by state law for this type of request, including a requirement that its senior officers certify the truthfulness and completeness of the documentation accompanying the filing.

In September of 2007, state regulators asked USAA for supplemental information, which USAA promptly provided. The state did not, however, ask that this additional information be certified. Two business days before the hearing, USAA was informed that its filing had been disapproved and the pending hearing would be cancelled based on this technicality.

We are currently considering all of our options going forward, including the possibility of re-filing.