TALLAHASSEE, Fla. - Jan. 27, 2009 - State Farm announced today that it's pulling out of the property insurance market throughout Florida.
State Farm Florida - the state's largest private homeowners insurer - estimates that the move will impact up to a million customers. The company plans to continue its other insurance divisions, including auto, which has about 2.8 million customers.
State Farm blames the state for its move. On Jan. 12, Florida regulators denied a State Farm request for a 47 percent average rate increase.
"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," says Florida Insurance Commissioner Kevin McCarty. "We have been hearing for months of possible plans to make such a move in Florida, including a document submitted ... as recently as Dec. 5." McCarty says the state will carefully review State Farm's plans and "explore all legal options as well."
The Florida Legislature could also become involved. "It is important to note that we have been working with state Sen. Mike Fasano, (R-New Port Richey) to develop legislation that will significantly limit the number of non-renewals a company can issue in a year," McCarty says.
Current State Farm policyholders will not see any changes in the near future. The Office of Insurance Regulation has 90 days to approve State Farm's plan. If approved, State Farm must then provide 180 days notice to customers before any policies can be non-renewed.
How can State Farm still insure autos?
In 2007, the Florida Legislature passed a law that requires an insurance company to sell homeowners policies in Florida providing it writes homeowners policies in other states and also writes auto insurance policies in Florida. However, there may be loopholes. For example, what if an insurance company writes only one homeowners policy in Florida? The legality of that situation has never been determined, and the issue is sure to surface in the court system. In the meantime, the Office of Insurance Regulation must navigate the legal waters for State Farm policyholders and all Floridians.
Should Insurance companies get a bail out and hold policy holders hostage?
Like a good neighbor