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Insurance Companies Want To Cut Discounts

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Aug 9, 2009 7:37 pm US/Eastern

Insurance Companies Want To Cut Discounts

TALLAHASSEE (CBS4) ― Claiming that current discounts are cutting their bottom line, insurance companies led by State Farm, are considering reducing or possibly even eliminating a number of credits given to policy holders. 

One of the big discounts that they would like to pare down is for what's know as "wind mitigation."  That's when a property owner receives a credit for installing storm shutters, impact resistant windows or beefed up garage doors to weather any storm. Other credits being considered for elimination are those for having more than one policy with the company, for not having filed a claim and for updating the residence's air condition, electrical or plumbing.

Homeowners who have State Farm for their property insurance coverage could see their premiums increase by 45 percent, according to CBS4 news partners The Miami Herald.

In order to cut the wind mitigation discount, State Farm will need approval from the state; all of the other discounts can be cut without state approval since they were offered voluntarily by the company.

State Farm says the cuts are necessary because their rates are so low. Two years ago they complained to the state about the mandated mitigation credits which they claimed were too high and were cutting into the companies profits. Last year they requested an average rate hike of 47 percent to make up for those losses. It was rejected but the Legislature agreed to discuss the impact of discounts on insurance companies. The first public hearing on the matter will be this Wednesday in Tallahassee.


(© MMIX CBS Television Stations. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. CBS4 news partner The Miami Herald contributed material for this report)

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