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State Farm to Pull Out of
Florida Homeowners Market
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District Court Affirms Commissioner McCarty's Denial of
State Farm Rate Increase
Florida HB 1711
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Commissioner Concerned about HB 1711
State Farm Mutual Automobile Insurance Co. plans to drop
1.2 million customers and leave Florida’s residential
market after state regulators denied a request to raise
prices.
The company cited risks from hurricanes and the rising
cost of everyday claims submitted by the state’s
homeowners. According to a State Farm representative,
surplus funds held by State Farm’s Florida unit fell by
$201 million, or 24 percent, in the first three quarters
of 2008, a period when no hurricanes hit the state.
“We regret the impact this will have on our customers,
employees and agents,” Jim Thompson, the president of
State Farm’s operations in the state, said in the
statement. “Faced with steeply declining resources to
cover future claims and expenses, State Farm Florida has
little choice.”
State Farm filed a plan with regulators to drop home
customers over a two-year span after the surplus at its
Florida unit dropped in the nine months ending September
30. The company lent $750 million to its Florida
subsidiary after a series of storms in 2004 that the
subsidiary was never able to repay. Under the plan filed
last week, State Farm proposes continuing to offer auto,
health and life insurance.
Florida’s insurance commissioner has 90 days to review
State Farm’s plan to ensure it complies with state law.
If approved, State Farm must then provide 180 days
notice before any policyholders can be denied a new
policy when coverage expires.
The commissioner’s office will review whether State Farm
is complying with a law governing car insurers that
don’t sell coverage of homes in the state and another
that requires companies to make adequate provisions
before dropping policyholders.
State Farm’s move follows a ruling by an administrative
law judge last month that denied the company a 47
percent rate increase on home policies. |
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