Florida Treasurer and Insurance Commissioner Bill Nelson today rejected Nationwide's recent 27 percent homeowner rate hike in a preliminary move that could mean refunds for thousands of customers of the state's fourth largest insurer. Nelson said Nationwide Insurance, when figuring higher rates for homeowners earlier this year, relied on a computer program that overestimated losses from four hurricanes by about 20 percent. The insurer imposed the rate hike May 31, without Nelson's approval. And because this rate hike has already been imposed, Nationwide may owe some of its customers a refund. At the heart of Nelson's decision is the discovery about computer modeling.
Many insurers seek higher rates by using computers to predict future losses from catastrophes.
Nationwide relied on just such a process to increase its rates. Nationwide now has 60 days to respond to Nelson and offer additional information the company thinks supports its rate hike. The company also has the right to request a formal hearing before an administrative hearing officer. In June, Nelson held a public hearing in Clearwater to take testimony from the insurer and consumers regarding the rate hike. During that hearing, Nationwide was asked to provide a comparison of its actual losses from past hurricanes versus what the computer model would predict.