State Farm to raise rates, wait continues

If you’re a homeowner, you live in Louisiana and you have State Farm Insurance, get ready to break into your piggy bank. A rate hike could be in store for parishes throughout the state – and quite a hefty one for residents of Terrebonne Parish. Numbers released by the company show insurance rates in the parish could increase by as much as 30 percent.

But when those changes would take effect is not clear.

The insurance titan submitted a request to the Louisiana Department of Insurance – which is charged with approving the request – at the end of December 2009. That request can carry a lengthy waiting period.

“Once you submit a filing, the department has 45 days to either deny the request, approve it, or ask for more information,” explained State Farm Public Affairs Specialist Molly Quirk-Kirby. With engines roaring earlier in the year, things are beginning to slow down.

According to the specialist, the department of insurance has requested more information from the insurance provider. “Right now, we’re in the process of delivering that information. So the ticker has started over,” she said. Meaning the company will have to wait even longer for a signal of approval, or rejection. “Right now, we’re in a holding pattern. We don’t know how long this process will take. It could be any day, but we just don’t know.”

Jim Donelon, Louisiana Department of Insurance commissioner, said requests of this nature typically take about 30 days to complete. “I expect my staff to finish the review in the very near future.” Based on briefings he has received, the commissioner said there were “issues” with the company’s request, but couldn’t go into details.

The insurance firm embarked on rate changes as an ailment for future losses and expenses. “We made the filing to address our current inadequacies. [Right now], our rates aren’t adequate,” said Quirk-Kirby.

Rates are determined by projections, she explained. For State Farm, that includes data from hurricane modelers.

“Exposure is a big factor. Obviously, location does have something to do with [it],” added Quirk-Kirby.

But if rates go up, the number of customers the company keeps may go down. “I would imagine some people would shop [around]. At the same time, knowing the product, quality and the strength of the brand… ] that speaks a lot for our business,” said the specialist. “I think a lot of people will continue their business with State Farm.”

Although the company isn’t preparing for a major decrease in business, “It wouldn’t surprise me if people shop [around],” said Quirk-Kirby.

If the measure passes, the statewide average increase would be 19.1 percent. “Individual policyholder impacts will vary depending on deductibles, policy limits and other factors,” noted Quirk-Kirby.

A breakdown of increases by major metropolitan areas shows coastal parishes taking the brunt of the storm physically and now, financially.

New Orleans could see a 30.4 percent price hike; Baton Rouge, 6.6 percent; Lake Charles, 35.2 percent; Lafayette, 35.2 percent and Shreveport with a decline of 5 percent.

The specialist said there is “less exposure” in the Shreveport area.