State Farm denied insurance increase
Nevada Insurance commissioner Alice Molasky-Arman has denied State Farm Insurance Co.’s application for an increase in nontenant homeowner’s insurance rates that would have raised annual charges in Carson City and Douglas County by more than 34 percent.
The company claimed its expenses would exceed premium income by more than 25 percent for fiscal 2004. Based on that, State Farm asked for statewide average increases totaling 24.9 percent. That would have raised nontenant homeowner rates 9 percent in Washoe County and 34.2 percent in Clark. Carson and Douglas rates also would have gone up 34.2 percent
But Molasky-Arman said division actuaries found that State Farm was earning a profit on structures insured up to $300,000.
“Any perceived rate inadequacy appeared to be for higher valued structures caused primarily by as few as five or 10 very large property claims,” she said.
Molasky-Arman said State Farm has a significant record of profitability for the past five years on buildings with $300,000 or less in total coverage. Because of that, she said she refused to increase the base rate for the company’s estimated 83,000 nontenant homeowner policies.
However, she did permit an overall 38.4 percent increase for condominium owners — in two steps. The new rates will become effective Jan. 15.