State Farm: In or Out of Florida?

Posted November 17th, 2009
by Staff (no comments)

FloridaFollowing the insurance industry in Florida can be a lot like riding a roller coaster. Over the past year, one company in particular has found themselves going back and forth about whether they will continue to do business in the homeowners insurance and property insurance markets in Florida.

State Farm Insurance was anathema last winter when they announced that they’d be pulling out of Florida. At the time, Governor Charlie Crist was quoted as saying, “Floridians will be much better off without them.” This was big news, because 700,000 homeowners policies in the state are held by the company, which is the largest private insurer in the state. The speculation was that those policies would be absorbed by Florida startup companies.

The Tide is Turning

Today, however, things seem to be changing. Regulators now indicate that there is a chance that some of State Farm’s homeowners insurance business will stay in Florida. Kevin McCarty, the state’s insurance commissioner, says that the state is optimistic and that it would be good all around to have State Farm’s presence in the state.

State Farm, however, doesn’t yet seem to give any indication that things have changed. The company states that they’re still leaving, and that they are negotiating with the state of Florida over the terms of the company’s withdrawal. The company believes the legislation regarding premium structure in the state to be inadequate. State Farm indicated they would pull out after the state rejected their request to increase rates.

Today, however, state regulators seem anxious to try to keep State Farm in the state. They seem more willing to approve regulatory hikes in premium rates, and to give insurers incentives to keep them in the state and insuring its residents.

Other insurance companies, such as Universal Property and Casualty and Citizens Property Insurance, have seen their rate increase requests improved over the past several months. In addition, regulators in Florida suggest that State Farm could reduce its discounts or change its discount structure to eliminate some discounts in order to give an effective rise in premiums.

Over the past few months, regulators have also softened their tone. They are trying to appear more sympathetic to property insurers. State Farm’s representatives have applauded these kinds of changes, but they also note that nothing has changed fundamentally. Risk in the state is high, and the premiums are too low to make it worth it for the company.

Categories: News

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