State OKs First Hikes in Earthquake Insurance : Regulation: The increases range from 37% to 209%. Sixty other requests have been filed since the Northridge temblor.

Californians will soon begin paying sharply higher premiums for earthquake insurance, as Insurance Commissioner John Garamendi on Friday approved the first round of rate increases since the Northridge temblor.

Although the rate hikes affect only five insurers, representing about 5% of the state market, they are just the front edge of a wave of 65 requests filed since the Jan. 17 quake.

Safeco Insurance Co. of America, the largest of the first five, with about 57,000 earthquake policyholders in California, was granted a 37% increase. For most Safeco customers, the new rate is $2.51 per $1,000 of coverage, with a 10% deductible, meaning that a customer with policy limits of $200,000 would pay $502 a year.

“It is with regret that we must grant the first residential earthquake rate increases in close to 20 years,” Garamendi said in a statement, “but the rating methods used by these companies and the resulting rates are in a reasonable range given the losses from the Northridge earthquake and forecasts for future quake losses.”

Facing estimated quake losses totaling $10 billion or more, virtually all large property insurers have suspended or restricted their writings of new homeowners and earthquake policies in California.

It was too early Friday to tell whether the price increases might melt the freeze on writing new policies.

Officials of Seattle-based Safeco called the rate hike “a good first step” on Friday, but the company said it has not decided whether to relax its moratorium on new homeowners and earthquake policies.

Other increases granted Friday were for Prudential Property & Casualty, $2.25 per $1,000 with a 15% deductible, a 122% increase; Safeco Insurance Co. of Illinois (a sister of Safeco of America), $2.76 with a 10% deductible, up 49%; Michigan Millers Mutual Insurance Co., $1.95 with a 10% deductible, up 209%, and American Family Home Insurance, $2 with a 10% deductible, up 208%. The latter two companies specialize in mobile home insurance.

The increases are effective immediately but are not retroactive, so a customer who renewed a policy in September would not get the increase until the policy expires in another 11 months.

Many of the remaining rate increases will probably be approved within the next few weeks, but some will be held up for further negotiations and a few for full-blown hearings, Deputy Insurance Commissioner William Ahern said.

Market leader State Farm has not yet filed a request but is expected to do so. No. 2 Allstate seeks a 100% increase, to $3 per $1,000 with a 10% deductible.

The most controversial request is that of Farmers Insurance Group, California’s third-largest homeowners and earthquake insurer, which seeks a 174% increase to $4.30 per $1,000 on policies with a 15% deductible. Farmers would also require a 20% co-payment on any claims exceeding the deductible. Thus, on a $200,000 claim, the 15% deductible would be $30,000 and the co-payment another $34,000.

Calling Farmers’ filing “complicated and unusual,” Ahern said it would be the first personal property policy he has seen with a co-payment. Co-payments are common on health insurance policies.