Throughout the last year, we experienced an unusually high frequency of weather-related catastrophe losses.  As you can imagine, this has led to a negative impact on our overall results.  Therefore, we are making the following adjustments to our homeowner line of business effective December 1, 2011: 

 

Underwriting / Policy Rule Changes: 

·         Minimum Deductible:  Our homeowner policy minimum deductible will be $500.  All policyholders currently at the $250 deductible will be moved to a $500 deductible.  We will be sending a letter to all of these policyholders to explain the change. 

 

·         Monoline Homeowner Minimum Deductible:  All unsupported homeowner new business policies (home policies without a companion auto policy) will be subject to a $1,500 mandatory minimum homeowner deductible.  If you are writing a new homeowner policy with a companion auto policy, our minimum deductible will be $500. 

 

·         Suburban Protection Class Rating Rule:  We have adjusted our Suburban Protection Class Rating Rule.  In order for a home to qualify for Suburban Rating, the dwelling must be within 5 road miles of the primary responding fire department.  Our previous rule allowed the dwelling to be within 6 miles.  We are clarifying this rule in our Personal Lines Manual pages. 

 

Premium Adjustment: 

·         Overall Change:  The overall rate increase is 12.4%.  The base rate changes include: 

 

o   Ultra Program:                                              7.0%

o   Protector Program:  (HO-3/8)                      2.6%

 

·         Discount Levels:  In anticipation of the introduction of our multivariate product, we are realigning various discount levels. These include: 

 

o   Loss History Discount:  We are modifying our loss free discounts to the following levels: 

§  3 year Loss Free discount:                    7%

§  5 year Loss Free discount:                   12%

 

o   Insurance Score Discounts:  We are adjusting two different insurance score discount tiers to the following discount levels: 

 

§  880+:                                                   25%

§  825 – 879:                                           15%

 

o   Group Discounts:  Based on deteriorated experience in many of our groups, we will be decreasing the discount level in many of the programs.   These changes range from 1% – 4%. 

 

·         Protection Class Relativities:  To improve our rate adequacy by Protection Class, we are adjusting the relativity levels.  This will assist us in offering a more adequate premium based on the protection of the risk. 

 

If you have any questions related to our homeowner product or rate change, please contact your Field Manager, Underwriter or me. 

We thank you for your continued loyalty and thinking of Frankenmuth Insurance on your new business accounts.