Posted on 04 Feb 09
State Farm, Florida’s second largest property insurer, reported that it is pulling out of the Florida home insurance marketplace two weeks after being turned down for a 47.1 average rate increase by the state regulator.
The company said it had filed plans to discontinue its Florida property insurance product lines because of its “substantially weakened financial position” related to its inability to obtain approval of “what it believes to be adequate property insurance rates.”
Florida Insurance Commissioner Kevin McCarty on Jan. 13 had upheld an administrative law judge’s ruling that State Farm had not proven a case for an increase.
In a statement today Mr. McCarty said, "Although this is disappointing news for Floridians, who have been loyal customers of State Farm, we are not surprised by State Farm's decision to stop offering all property insurance in Florida.
He said the Office of Insurance Regulation had "been hearing for months of possible plans to make such a move in Florida, including a document submitted to the office as recently as Dec. 5 as part of their recoupment filing that showed an anticipated reduction to 655,000 HO policies by 2010.”
State Farm Florida Insurance Company, headquartered in Winter Haven, Fla., said it currently services approximately 1.2 million residential insurance and other related property insurance policies.
Jim Thompson, president, State Farm Florida, said in a statement, “This is not an action we wanted to take, but one we must take given the realities of the Florida property insurance market. We regret the impact this will have on our customers, employees and agents in Florida.”
Company operating costs, he said, “have risen as day-to-day claims have increased both in their number and severity. State-mandated discounts have further reduced needed revenues. During the first three quarters of 2008 (a year with relatively modest catastrophe impact and no major hurricane), State Farm Florida saw its surplus reduced by $201 million.