TAMPA - Florida insurance regulators have vowed to lower home insurance rates, but insurance companies aren't making it easy.

On Friday, the United Services Automobile Association, the state's fourth-largest home insurer, sought permission to raise premiums 53.9 percent on average.

It's the largest rate increase request so far. But more than 100 insurance companies have not filed final rate requests with the state's Office of Insurance Regulation. They have until Sept. 30 to file proposals.

USAA, which specializes in insuring military service members and their families, said the higher rate is needed to reflect the increased risk of hurricanes and other natural disasters in Florida. A state law passed in January that allowed insurers to buy cheaper reinsurance from the state-backed Hurricane Catastrophe Fund didn't create the savings USAA needed to lower its rates, USAA spokeswoman Lynne McChristian said.

Reinsurance is backup insurance for insurers

"Any savings that we gained due to purchasing reinsurance from the state was negated by the wide gap between the rates we have now and what's [needed] for rate adequacy," McChristian said about USAA, which has 299,667 policyholders in Florida, including 47,476 in Hillsborough, Pinellas and Pasco counties.

USAA initially requested a statewide rate reduction of 3.1 percent in March, but it was an estimate. Friday's filing, known as a "true-up" filing, reflects the company's real reinsurance costs, McChristian said.

What's more, USAA rates are among the lowest in the state, averaging $921 a year, she said.

The rate increase, if approved, would take effect in 2008 when a policyholder's renewal occurs.

But there's no guarantee that USAA will get what it asks for. Last week, the Office of Insurance Regulation rejected Florida Farm Bureau Group's request to increase home insurance rates 26.8 percent. In a statement issued last week, the office said true-up filings from Florida Farm Bureau and others show that companies are not passing the savings from lower reinsurance costs on to customers. Instead, the savings are being used to buy additional reinsurance.

That's not what the Legislature had in mind when it expanded the CAT fund earlier this year, said Office of Insurance Regulation spokesman Jonathon Kees. "Not only did they purchase reinsurance, but it was from a subsidiary," Kees said of Florida Farm Bureau. "It was a way to make a profit off the backs of consumer who are, through assessments, funding this CAT fund."

The state predicted the CAT fund expansion would lead to a 24 percent cut in rates. That hasn't happened, although only a few companies have made true-up filings so far.

But state insurance regulators say they are bent on giving homeowners the savings they were originally promised. "We're going to make sure that the savings demanded by the Legislature are passed on to consumers and not used to purchase duplicative reinsurance," Kees said.

Florida represents just 9 percent of USAA's policyholders but accounts for 49 percent of the company's exposure to natural disaster risk nationwide, McChristian said. What's more, USAA has paid $220 million more in Florida homeowners insurance losses and expenses than it has collected in premiums over the last decade, she said. "We must manage our business to keep rates at an adequate level so the 91 percent of our members who live outside Florida are not subsidizing those who do live here," McChristian said.

Last year, USAA asked the state to approve a 40 percent increase in property insurance rates but ended up getting approval for 16 percent.

"We feel it's our responsibility to make sure that our property rates in Florida more appropriately reflect the risk exposure," McChristian said.

In April, USAA Chairman and CEO Bob Davis said the company was cutting back on new policies it writes in Florida because the insurance market here is "untenable."

USAA implemented a plan to sell homeowners and renters insurance only to active military members who are ordered to relocate to Florida. The plan also called for dropping 27,000 second-home policies this summer.

USAA attributed the cutback to legislative and regulatory action that prevented it from charging rates reflecting the risk of hurricanes and other natural disasters. The company said it took the action "to protect the financial viability of USAA."

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By RUSSELL RAY The Tampa Tribune

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