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Summaryof
Commissioner
OrderRegarding
State
Farm
Rate
Reductionand
Refund
November
2009
Background
•
This
order
is
theresult
ofa
re-hearing.The
original
ratereductionorderwas
first
issued
in
2003,
but
remanded
by
the
Third
Court
of
Appeals
in
2008
to
TDI
for
further
proceedings
due
to
their
finding
that
a
portionof
the
underlying
law
enacted
in
2003
was
unconstitutional.
Policyholders
—
Refunds
•
The
total
amount
of
the
refund,
plusinterest,
is
$310
million.
Individual
amounts
will
vary
amongpolicyholders,
with
differences
based,
in
large
part,
on
length
of
time
with
the
companyand
theamount
of
premium
paidto
State
Farm.
Further
information
regardingrefunds
or
premium
credits
to
policyholders,
both
currentand
former,
will
be
made
availablepending
any
appeal
of
the
order.
Elements
of
the
RateHearing
and
Review
ofEvidence
•
The
actualhearing
phase
took
place
on
separate
days
beginning
on
March
30,
2009,
and
concluding
May
2,
2009.
•
Theevidence,testimony,
transcripts
andexhibits
numbered
in
the
thousands
of
pages.
In
the
succeeding
months,
time
wastaken
to
review
the
record
and
all
admissibleevidence,
as
well
as
drafting
the
order.
•
In
the2009ratehearing,
TDI
Staffwithdrew
their
-12%
reduction
due
in
part
toSFL’s
premium
calculationerror
that
became
known
afterthe
original
September
2003rate
hearing.
Therewas
insufficient
evidence
in
the
record
to
sustain
the
-12%ratereduction
originally
recommended
by
Staff
in
2003.
Elements
of
theOrder
•
Base
RefundS
The
Commissioner
found
SFL’s
rates
were
excessive
and
is
ordering
SFL
to
pay
refundsamounting
to
6.2%
of
premium
for
policyholders
insured
with
SFL
from
September
2003throughAugust
2004.
The
Commissioner
is
also
ordering
SFL
to
payrefundsamounting
to
3.4%
of
premium
for
policyholders
insured
with
SFLfrom
September
2004
through
July
2008
(excluding
newpolicies
written
from
June
1,
2008,
through
July
31,
2008).
The
estimate
of
the
total
refundsordered
is
approximately$257
million,
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