TALLAHASSEE, Fla. – June 3, 2008 – The Hartford insurance companies are the latest targets of the state’s smackdown on property insurance rates.

State officials said Monday the Office of Insurance Regulation issued a final decision Friday rejecting Hartford Insurance Co. of the Midwest and its affiliates’ average statewide price increase of 40 percent requested last year.

The Hartford decision is part of a campaign to “protect Florida consumers from unwarranted rate increases,” Insurance Commissioner Kevin McCarty said in a statement.

Hartford, which has 92,111 property insurance policies statewide and about 26,832 in South Florida, has 30 days to petition the 1st District Court of Appeal in Tallahassee but isn’t expected to.

“We are disappointed by this decision but look forward to working with [regulators] on future filings to most effectively serve our customers in Florida,” Hartford spokesman Thomas Hambrick said in an e-mail.

State regulators warned in September they would turn down the rate proposal because they said Hartford’s projected profits and predicted losses are excessive, prompting Hartford to ask for a hearing. After a hearing earlier this year, a judge with the Florida Division of Administrative Hearings recommended rejecting the rate hike.

Since the state Legislature suspended arbitration panels last year, Hartford is the first insurer to have its rate increase request rejected by the state insurance commissioner after an administrative hearing.

In the past, companies that disagreed with regulators could appeal to the administrative hearings division or to an arbitration panel, which often overturned regulators’ decisions. But Hartford no longer has the arbitration option because the Legislature temporarily banned arbitration panels last year and made the change permanent this year.

Hartford’s proposed 40 percent rate increase came after it initially dropped rates last year by an average of 13.6 percent. At state Senate hearings earlier this year, Hartford officials testified that they used profit margins of 15 percent or more to calculate the rate request and used $1 billion last year to buy back stock.

State insurance regulators expect to issue a similar ruling for Florida Farm Bureau General Insurance Co., which has 100,540 polices statewide and 4,729 in South Florida. Florida Farm asked to raise property insurance rates by a statewide average 30 percent, after dropping them by about 25 percent last year. Hartford and Florida Farm are the only insurers still contesting regulators about rate requests from last year.

The arbitration panel changes were part of sweeping property insurance laws. Last year’s law required insurers to pass savings to consumers from a state program offering cheaper backup coverage to insurers. This year, the law was shaped by the Senate hearings investigating why Hartford, Florida Farm and other insurers tried to avoid passing the savings to consumers.

Copyright © 2008 South Florida Sun-Sentinel, Julie Patel. Distributed by McClatchy-Tribune Information Services.