Farmers Insurance to raise auto rates 12 percent

Brendan Riley

Tuesday, Sept. 10, 1996 | 11:59 a.m.

CARSON CITY -- Farmers Insurance, which imposed a moratorium on new auto insurance policies in Las Vegas last May after its 13 percent rate hike request was rejected, has received a 12 percent boost.

Nevada Insurance Commissioner Alice Molasky said Monday that Farmers had followed up with a 23.1 percent increase request after getting shot down last spring, but she only approved part of the proposal because it was based on unreasonably high loss projections.

Even though the request was trimmed, it still means Farmers customers will be paying about $16 million more per year in premiums. That works out to an average of $100 annually for each of the company's 160,000 Nevada policy-holders.

Molasky said if the entire request had been approved, Nevadans would have paid an additional $15 million in annual premium payments.

Molasky also cut a request from Farmers' high-risk company, Mid-Century Insurance, from 14 percent to an average of 8 percent. The increase works out to about $2.1 million a year, or about $45 per customer.

Molasky said the total request, if approved, would have added another $1.6 million in yearly premiums.

The rate requests were reduced because the companies' "anticipated future loss projections appear to be unreasonably high and would result in excessive rates," she said.

But Molasky said some rates were needed because the current rates were inadequate. The new rates take effect Nov. 16 for new and renewal business.

The last increase for Farmers was 9.7 percent and the last for Mid-Century was 8.4 percent. Both took effect in May 1995.

Farmers was rejected last spring on a 13 percent hike request, and promptly announced plans to stop selling new auto insurance policies in Las Vegas and many other areas of Nevada.

The company claimed at that point that it had lost $16 million on its Nevada business in 1994 and 1995. A spokesman said auto collision repair costs in the state increased 24 percent between 1993 and 1995, and claims for bodily injury grew 21 percent in the same period.

There was no immediate word on whether the moratorium on new policies, which didn't affect Carson City and Reno, would be lifted. The step was the first of its sort by Farmers in any of the 29 states where it sells auto insurance.

Farmers has 160,000 customers in Nevada. Its high-risk company, Mid-Century Insurance, has another 45,000 customers. State Farm is the largest individual insurance company in the state.