State Farm just announced this morning that they are pulling their
Homeowner's Insurance Policies Out of the State of Florida. This will
affect over 800,000 property owners, all Florida State Farm Agencies
and Offices, and all of their Florida Employees. Could the real estate
market and economy get any worse??
Replies
36
SoWal Insider
We think: State Farm's withdrawal from Florida isn't the end of the world -- OrlandoSentinel.com
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EDITORIAL
We think: State Farm's withdrawal from Florida isn't the end of the world
We think: State Farm's withdrawal from Florida isn't the end of the world
January 29, 2009
Let's bust some myths:
Myth No. 1: "With every policy comes the promise that we will be there when you need us." So says State Farm's Web site. But the State Farm subsidiary writing homeowners policies in Florida announced on Tuesday that it's leaving the state. That means 1.2 million loyal customers may have to find another insurer who will be there when they need them.
Myth No. 2: The property-insurance market in Florida is so grim that underwriters like State Farm can't afford to do business here. Interesting -- especially since the just-released report from the National Association of Insurance Commissioners indicates companies writing policies for residences in Florida together netted a 39 percent profit in 2007. And because Florida escaped hurricanes in 2008, they'll earn another windfall for that year.
Myth No. 3: Government regulations are killing the industry. Consumers and the industry would do better without them. But who, other than some insurance-company executives, thinks in the current economy that these businesses should be left to their own devices? AIG, Detroit's Big Three, and the excesses and unsound business practices that led to the bailouts of many of the nation's leading credit houses remain fresh in consumers' minds.
So, too, should this: Florida's legislators and regulators gave State Farm and other insurance companies exactly what they said they needed to lower or keep in check the rates they charge homeowners.
The state sold them discounted backup insurance that they need to pay claims after catastrophic storms. Insurers had cried that the high cost of that "reinsurance" had compelled them to drop policyholders and jack up rates.
And the state enticed residents to harden their homes against storms in exchange for getting discounts on their policies. Insurers said the better-built homes would allow them to lower what they pay out in claims, and that would help them keep rates under control.
But in the end that wasn't enough for State Farm. It requested a 47 percent average rate increase from regulators, which they and an administrative law judge found actuarially unsound and insupportable. Not getting its way, State Farm Florida announced it's leaving its namesake.
But not before it and the industry get a shot of reality.
Dose No. 1: Their good times at consumers' expense could end. Legislators vow they'll pass a bill requiring insurers to do what's expected of them -- underwrite risk rather than insulate themselves with sure things. For example, State Farm Florida may be leaving, but another State Farm subsidiary, State Farm Mutual Auto, expects to add to its $3 billion sales portfolio. Lawmakers would try to close the loophole that lets a company like State Farm Mutual Auto offer its lucrative line but no homeowner policies. It's worth exploring.
Dose No. 2: Despite Gov. Charlie Crist's offer to drive State Farm Florida to the border, State Farm may not get out so easily. Florida law says insurers can't withdraw from the state if doing so is "hazardous to policyholders or the public." The company and state lawyers might squabble over that language. But another law legislators hope to pass might settle any argument. It would allow an insurer to shed just 2 percent of its customers a year. Pass that bill this year and State Farm Florida won't disappear for years to come.
Dose No. 3: State Farm's departure wouldn't leave the state in ruins. More than 30 new companies began serving Florida in the past few years. They've written about a half-million policies, and they're expected to be able to take on a half-million more should State Farm exit the state. Other insurers also should enter the marketplace. State-run Citizens Property Insurance Corp. would take on tens of thousands of new customers, causing the state to assume more risk to homeowners. But the tumbling cost of reinsurance in the marketplace should allow the state to return some of its risk to the private sector.
State Farm's exit doesn't mean Florida's bought the farm.
Text size: increase text sizedecrease text size
EDITORIAL
We think: State Farm's withdrawal from Florida isn't the end of the world
We think: State Farm's withdrawal from Florida isn't the end of the world
January 29, 2009
Let's bust some myths:
Myth No. 1: "With every policy comes the promise that we will be there when you need us." So says State Farm's Web site. But the State Farm subsidiary writing homeowners policies in Florida announced on Tuesday that it's leaving the state. That means 1.2 million loyal customers may have to find another insurer who will be there when they need them.
Myth No. 2: The property-insurance market in Florida is so grim that underwriters like State Farm can't afford to do business here. Interesting -- especially since the just-released report from the National Association of Insurance Commissioners indicates companies writing policies for residences in Florida together netted a 39 percent profit in 2007. And because Florida escaped hurricanes in 2008, they'll earn another windfall for that year.
Myth No. 3: Government regulations are killing the industry. Consumers and the industry would do better without them. But who, other than some insurance-company executives, thinks in the current economy that these businesses should be left to their own devices? AIG, Detroit's Big Three, and the excesses and unsound business practices that led to the bailouts of many of the nation's leading credit houses remain fresh in consumers' minds.
So, too, should this: Florida's legislators and regulators gave State Farm and other insurance companies exactly what they said they needed to lower or keep in check the rates they charge homeowners.
The state sold them discounted backup insurance that they need to pay claims after catastrophic storms. Insurers had cried that the high cost of that "reinsurance" had compelled them to drop policyholders and jack up rates.
And the state enticed residents to harden their homes against storms in exchange for getting discounts on their policies. Insurers said the better-built homes would allow them to lower what they pay out in claims, and that would help them keep rates under control.
But in the end that wasn't enough for State Farm. It requested a 47 percent average rate increase from regulators, which they and an administrative law judge found actuarially unsound and insupportable. Not getting its way, State Farm Florida announced it's leaving its namesake.
But not before it and the industry get a shot of reality.
Dose No. 1: Their good times at consumers' expense could end. Legislators vow they'll pass a bill requiring insurers to do what's expected of them -- underwrite risk rather than insulate themselves with sure things. For example, State Farm Florida may be leaving, but another State Farm subsidiary, State Farm Mutual Auto, expects to add to its $3 billion sales portfolio. Lawmakers would try to close the loophole that lets a company like State Farm Mutual Auto offer its lucrative line but no homeowner policies. It's worth exploring.
Dose No. 2: Despite Gov. Charlie Crist's offer to drive State Farm Florida to the border, State Farm may not get out so easily. Florida law says insurers can't withdraw from the state if doing so is "hazardous to policyholders or the public." The company and state lawyers might squabble over that language. But another law legislators hope to pass might settle any argument. It would allow an insurer to shed just 2 percent of its customers a year. Pass that bill this year and State Farm Florida won't disappear for years to come.
Dose No. 3: State Farm's departure wouldn't leave the state in ruins. More than 30 new companies began serving Florida in the past few years. They've written about a half-million policies, and they're expected to be able to take on a half-million more should State Farm exit the state. Other insurers also should enter the marketplace. State-run Citizens Property Insurance Corp. would take on tens of thousands of new customers, causing the state to assume more risk to homeowners. But the tumbling cost of reinsurance in the marketplace should allow the state to return some of its risk to the private sector.
State Farm's exit doesn't mean Florida's bought the farm.
SoWal Insider
http://www.orlandosentinel.com/news/columnists/orl-miket2909jan29,0,7711566.columnSorry, Charlie, State Farm needs to stay
Mike Thomas | COMMENTARY
January 29, 2009
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State Farm is bailing out of Florida, and Charlie Crist says good riddance.
I'm not sure the thousands of policyholders about to be thrown into the maw of Charlie's socialized insurance market will agree.
And the consequences extend well beyond that.
State Farm is about to dump 1.2 million policies, which means a massive expansion of the state-run Citizens Property Insurance. That will put taxpayers at even greater risk when the next big hurricane hits because Citizens is woefully underfunded.
Mike Thomas Mike Thomas Bio | E-mail | Recent columns
Related links
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TALK ABOUT IT: Does State Farm needs to stay?
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State Farm wants out of Florida home-insurance business
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We think: State Farm's withdrawal from Florida isn't the end of the world
*
As State Farm and others leave, consumers will lose
*
Consumer News
It also threatens the credit rating of not only the state but also the dozens of small private insurance companies that have set up shop in the past few years. Those insurers, many of them untested in a catastrophic event, depend on the state's ability to borrow money to help them pay their claims after a major storm.
That borrowing capacity is dwindling as the gap between the state's hurricane obligations and its ability to meet them grows.
A major rating agency for small insurers, Demotech, has notified them that they have until May 15 to demonstrate an ability to pay claims if the Florida Hurricane Catastrophe Fund goes bust, which would be a given after a major storm.
The fund is obligated to pay out $29 billion in claims but only has about $10 billion in the bank -- most of that borrowed money, by the way.
You need insurance to buy a house. A wholesale rating downgrade of Florida's insurance carriers could roil a real-estate market just showing signs of life.
This is serious stuff. And it could not be happening at a worse time.
Charlie Crist's foolish quest to suppress insurance rates is pushing Florida off a cliff.
This takes me back to State Farm.
It claims to be losing $20 million a month on property insurance. It says its Florida operation will be insolvent by 2011. The national headquarters had to bail it out with $750 million after the 2004-05 hurricanes.
Unlike Charlie Crist, State Farm can't discount rates by obligating taxpayers to pay billions in tax increases if we are hit by a major hurricane.
State Farm has to have the money in the bank.
So State Farm asked for a whopping 47 percent rate increase.
The amount was stunning.
I think State Farm looked at the Florida market long-term, looked at dealing with Crist for six more years and put an offer on the table it knew would be rejected so it could walk away.
There is no way the small insurers can pick up all those policies in the 2 1/2 years it will take State Farm to close out its property-insurance business. And so many of those policies will end up with Citizens Property. This only will increase the angst of credit-rating agencies.
Crist has Florida on a path toward junk-bond status.
t would have been better to simply give State Farm its rate increase.
As a State Farm customer, I would have liked the option of accepting the increase or going with a different insurer. I don't need Crist and company making that decision for me.
This also would have created a much more orderly retreat of State Farm from the Florida market.
Alas, it did not fit in the script Charlie has written for his moral crusade against the insurance industry.
Mike Thomas Mike Thomas Bio | E-mail | Recent columns
Related links
*
TALK ABOUT IT: Does State Farm needs to stay?
*
State Farm wants out of Florida home-insurance business
*
We think: State Farm's withdrawal from Florida isn't the end of the world
*
As State Farm and others leave, consumers will lose
*
Consumer News
So now we could well face chaos in the market.
This is why some state officials are talking about limiting the number of policies State Farm can shed each year, dragging the process out. You can't order a company to continue losing money.
What message would that send to all those insurers the state is trying to lure into the market? Come to Florida, where we will regulate you into major losses and then prevent you from leaving.
Crist also talks about banning State Farm from selling auto insurance. I doubt that is legal. All it would do is decrease competition, increase costs and punish people who want to keep State Farm.
This week in Osceola County, Crist said property-insurance rates are "finally going down, something that hasn't happened in decades."
We are seeing the results of his triumph.
As for insurance rates going down, stay tuned.
They either are going back up -- way up in some cases -- or Florida is going to come crashing down.
Mike Thomas can be reached at mthomas@orlandosentinel.com or 407-420-55....yet another opinion
Mike Thomas | COMMENTARY
January 29, 2009
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* next
State Farm is bailing out of Florida, and Charlie Crist says good riddance.
I'm not sure the thousands of policyholders about to be thrown into the maw of Charlie's socialized insurance market will agree.
And the consequences extend well beyond that.
State Farm is about to dump 1.2 million policies, which means a massive expansion of the state-run Citizens Property Insurance. That will put taxpayers at even greater risk when the next big hurricane hits because Citizens is woefully underfunded.
Mike Thomas Mike Thomas Bio | E-mail | Recent columns
Related links
*
TALK ABOUT IT: Does State Farm needs to stay?
*
State Farm wants out of Florida home-insurance business
*
We think: State Farm's withdrawal from Florida isn't the end of the world
*
As State Farm and others leave, consumers will lose
*
Consumer News
It also threatens the credit rating of not only the state but also the dozens of small private insurance companies that have set up shop in the past few years. Those insurers, many of them untested in a catastrophic event, depend on the state's ability to borrow money to help them pay their claims after a major storm.
That borrowing capacity is dwindling as the gap between the state's hurricane obligations and its ability to meet them grows.
A major rating agency for small insurers, Demotech, has notified them that they have until May 15 to demonstrate an ability to pay claims if the Florida Hurricane Catastrophe Fund goes bust, which would be a given after a major storm.
The fund is obligated to pay out $29 billion in claims but only has about $10 billion in the bank -- most of that borrowed money, by the way.
You need insurance to buy a house. A wholesale rating downgrade of Florida's insurance carriers could roil a real-estate market just showing signs of life.
This is serious stuff. And it could not be happening at a worse time.
Charlie Crist's foolish quest to suppress insurance rates is pushing Florida off a cliff.
This takes me back to State Farm.
It claims to be losing $20 million a month on property insurance. It says its Florida operation will be insolvent by 2011. The national headquarters had to bail it out with $750 million after the 2004-05 hurricanes.
Unlike Charlie Crist, State Farm can't discount rates by obligating taxpayers to pay billions in tax increases if we are hit by a major hurricane.
State Farm has to have the money in the bank.
So State Farm asked for a whopping 47 percent rate increase.
The amount was stunning.
I think State Farm looked at the Florida market long-term, looked at dealing with Crist for six more years and put an offer on the table it knew would be rejected so it could walk away.
There is no way the small insurers can pick up all those policies in the 2 1/2 years it will take State Farm to close out its property-insurance business. And so many of those policies will end up with Citizens Property. This only will increase the angst of credit-rating agencies.
Crist has Florida on a path toward junk-bond status.
t would have been better to simply give State Farm its rate increase.
As a State Farm customer, I would have liked the option of accepting the increase or going with a different insurer. I don't need Crist and company making that decision for me.
This also would have created a much more orderly retreat of State Farm from the Florida market.
Alas, it did not fit in the script Charlie has written for his moral crusade against the insurance industry.
Mike Thomas Mike Thomas Bio | E-mail | Recent columns
Related links
*
TALK ABOUT IT: Does State Farm needs to stay?
*
State Farm wants out of Florida home-insurance business
*
We think: State Farm's withdrawal from Florida isn't the end of the world
*
As State Farm and others leave, consumers will lose
*
Consumer News
So now we could well face chaos in the market.
This is why some state officials are talking about limiting the number of policies State Farm can shed each year, dragging the process out. You can't order a company to continue losing money.
What message would that send to all those insurers the state is trying to lure into the market? Come to Florida, where we will regulate you into major losses and then prevent you from leaving.
Crist also talks about banning State Farm from selling auto insurance. I doubt that is legal. All it would do is decrease competition, increase costs and punish people who want to keep State Farm.
This week in Osceola County, Crist said property-insurance rates are "finally going down, something that hasn't happened in decades."
We are seeing the results of his triumph.
As for insurance rates going down, stay tuned.
They either are going back up -- way up in some cases -- or Florida is going to come crashing down.
Mike Thomas can be reached at mthomas@orlandosentinel.com or 407-420-55....yet another opinion
Beach Fanatic
Another Property Insurance Company Leaving Florida
Companies line up to take over State Farm policies
ORLANDO, Fla. ? Feb. 23, 2009 ? More Florida-based insurers are eagerly seeking property-insurance customers whose policies will eventually be dropped by State Farm Florida.
Northern Capital Insurance has announced that it can take as many as 50,000 State Farm policyholders.
State Farm announced in January that it would drop its Florida property-insurance customers ? more than a million ? over the next two years or so.
Northern Capital is among the companies that in the past have received approval to take policies from state-backed Citizens Property Insurance.
Other insurers that have said they want to pick up thousands of State Farm policies include Florida Peninsula, Security First, American Traditions, Modern USA, Edison, Olympus, Capitol Preferred and Southern Fidelity.
State Farm isn?t the only insurer getting out of property coverage.
Encompass Insurance said last week it will drop all its homeowners-insurance policies in Florida by 2011.
The company has started to notify its 13,000 homeowners policyholders by mail about the change, spokeswoman Jeralyn Thompson said.
?Market conditions make it really difficult for us to meet our long-term business objectives in the state,? said Thompson, who added that the company is not making a profit on its Florida property-insurance policies.
All Encompass customers will receive nonrenewal notices at least 180 days before their policies end.
Encompass will continue to maintain its Florida auto-insurance business, Thompson said.
Meanwhile, state insurance regulators had a public hearing Feb. 18 in Tallahassee to discuss how customers? credit histories are used by insurance companies to set prices for policies.
The Florida Office of Insurance Regulation had sent subpoenas to Allstate, Geico, Nationwide, Progressive and State Farm Florida, asking each company to send representatives to testify about how the companies use credit scoring, histories and models to underwrite and set rates for consumers.
Regulators also asked the companies to talk about actions they have taken to address concerns that the use of credit scores and credit models have a disproportionately negative effect on certain classes of people; efforts they have taken to reduce discrimination based on income or race; and the possible effect on the companies if the state prohibited the use of credit scoring or credit information.
Copyright ? 2009 The Orlando Sentinel, Fla., Anika Myers Palm. Distributed by McClatchy-Tribune Information Services.
Companies line up to take over State Farm policies
ORLANDO, Fla. ? Feb. 23, 2009 ? More Florida-based insurers are eagerly seeking property-insurance customers whose policies will eventually be dropped by State Farm Florida.
Northern Capital Insurance has announced that it can take as many as 50,000 State Farm policyholders.
State Farm announced in January that it would drop its Florida property-insurance customers ? more than a million ? over the next two years or so.
Northern Capital is among the companies that in the past have received approval to take policies from state-backed Citizens Property Insurance.
Other insurers that have said they want to pick up thousands of State Farm policies include Florida Peninsula, Security First, American Traditions, Modern USA, Edison, Olympus, Capitol Preferred and Southern Fidelity.
State Farm isn?t the only insurer getting out of property coverage.
Encompass Insurance said last week it will drop all its homeowners-insurance policies in Florida by 2011.
The company has started to notify its 13,000 homeowners policyholders by mail about the change, spokeswoman Jeralyn Thompson said.
?Market conditions make it really difficult for us to meet our long-term business objectives in the state,? said Thompson, who added that the company is not making a profit on its Florida property-insurance policies.
All Encompass customers will receive nonrenewal notices at least 180 days before their policies end.
Encompass will continue to maintain its Florida auto-insurance business, Thompson said.
Meanwhile, state insurance regulators had a public hearing Feb. 18 in Tallahassee to discuss how customers? credit histories are used by insurance companies to set prices for policies.
The Florida Office of Insurance Regulation had sent subpoenas to Allstate, Geico, Nationwide, Progressive and State Farm Florida, asking each company to send representatives to testify about how the companies use credit scoring, histories and models to underwrite and set rates for consumers.
Regulators also asked the companies to talk about actions they have taken to address concerns that the use of credit scores and credit models have a disproportionately negative effect on certain classes of people; efforts they have taken to reduce discrimination based on income or race; and the possible effect on the companies if the state prohibited the use of credit scoring or credit information.
Copyright ? 2009 The Orlando Sentinel, Fla., Anika Myers Palm. Distributed by McClatchy-Tribune Information Services.
SoWal Insider
OK - don't get me started. FL has no idea how to effectively manage their carriers, which I have proposed! Instead, they choose to allow carriers to treat the state like candy during good years and the plague if they've experienced any losses - ANYWHERE in The COUNTRY! It is insane what the powers that be in FL will allow!
Beach Fanatic
This reminds me that I meant to post about a letter I got from State Farm the other day. I still have my auto insurance with them, because so far nobody can beat their price. But the letter made me think maybe I ought to pay more just for the satisfaction of going elsewhere.
State Farm was never my home insurer. For more than a decade, I was with a company that left Florida, and I ended up with Citizens. Recently I was "taken out" of Citizens. So State Farm informs me that if I have auto insurance with them, which I do, and also either have Citizens or a company that took me out of Citizens, I am eligible for a discount on my auto insurance, but only if State Farm is the agent for the property insurance. As I read this, not only do they want to keep on writing auto insurance in Florida while leaving homeowners high and dry, they want to collect the commissions for that property insurance they are no longer offering. Am I missing something, or does this sound like double dipping, or maybe having your cake and eating it too would be more accurate?
State Farm was never my home insurer. For more than a decade, I was with a company that left Florida, and I ended up with Citizens. Recently I was "taken out" of Citizens. So State Farm informs me that if I have auto insurance with them, which I do, and also either have Citizens or a company that took me out of Citizens, I am eligible for a discount on my auto insurance, but only if State Farm is the agent for the property insurance. As I read this, not only do they want to keep on writing auto insurance in Florida while leaving homeowners high and dry, they want to collect the commissions for that property insurance they are no longer offering. Am I missing something, or does this sound like double dipping, or maybe having your cake and eating it too would be more accurate?
SoWal Insider
This reminds me that I meant to post about a letter I got from State Farm the other day. I still have my auto insurance with them, because so far nobody can beat their price. But the letter made me think maybe I ought to pay more just for the satisfaction of going elsewhere.
State Farm was never my home insurer. For more than a decade, I was with a company that left Florida, and I ended up with Citizens. Recently I was "taken out" of Citizens. So State Farm informs me that if I have auto insurance with them, which I do, and also either have Citizens or a company that took me out of Citizens, I am eligible for a discount on my auto insurance, but only if State Farm is the agent for the property insurance. As I read this, not only do they want to keep on writing auto insurance in Florida while leaving homeowners high and dry, they want to collect the commissions for that property insurance they are no longer offering. Am I missing something, or does this sound like double dipping, or maybe having your cake and eating it too would be more accurate?
This is exactly what is so infuriating. The State of Florida allows the carriers to cherry pick the business!
If they pull out of home owners coverage, the state should tell them 'no more coverage for you in Florida!' If a property and casualty carrier wants to do business in FL, they write all lines across the state, period! But, you won't get anyway with the legislators on this one! I'm with you, I'd cancel the State Farm auto coverage, too. Is it a deep discount they are giving you? Dern them! And, dern the state for allowing this kind of business!
SoWal Insider
This reminds me that I meant to post about a letter I got from State Farm the other day. I still have my auto insurance with them, because so far nobody can beat their price. But the letter made me think maybe I ought to pay more just for the satisfaction of going elsewhere.
State Farm was never my home insurer. For more than a decade, I was with a company that left Florida, and I ended up with Citizens. Recently I was "taken out" of Citizens. So State Farm informs me that if I have auto insurance with them, which I do, and also either have Citizens or a company that took me out of Citizens, I am eligible for a discount on my auto insurance, but only if State Farm is the agent for the property insurance. As I read this, not only do they want to keep on writing auto insurance in Florida while leaving homeowners high and dry, they want to collect the commissions for that property insurance they are no longer offering. Am I missing something, or does this sound like double dipping, or maybe having your cake and eating it too would be more accurate?
You should go get a few quotes from different insurance agents for both homeowners and auto (some will write both and give you a discount too). Then you should match these with the price/service you receive from your State Farm agent. Then you should go with whoever gives you the best coverage/service for the best price--even if that happens to be State Farm (money is money afterall).
However, just for laughs, you should forward a copy of that letter to the Florida Insurance Commissioner with a copy to Gov Crist and let them know what you think. (Office of Insurance Regulation) Personally, I think that's a pretty ballsy move by the State Farm Agent to put such a thing in writing--maybe the Insurance Commissioner will feel the same.
Edited
Beach Fanatic
State Farm proposal - for Florida
OIR approves portions of State Farm proposal, rejects others
TALLAHASSEE, Fla. ? Aug. 7, 2009 ? State regulators on Thursday approved a slate of requests from State Farm Florida Insurance Co. that will raise premiums for homeowners by an average of 28.4 percent.
The decision by the Office of Insurance Regulation (OIR), agency officials say, would result in additional premiums of $278 million for the company after all policies come up for renewals beginning Dec. 1.
But the rate increases will target only those customers who now benefit from a handful of voluntary discounts offered by State Farm, including premium breaks for policyholders who also insure their cars with the company, have a home security system or have not filed a claim in several years.
State insurance regulators, however, rejected a company request to reduce premium discounts it is required to offer customers who hurricane-proof their homes, saying the company must provide additional data before regulators will be willing to modify discounts already in place.
?They need to do some more work on that piece,? said Belinda Miller, OIR deputy commissioner.
State lawmakers recently enacted legislation requiring insurers to offer premium discounts for homes that are better able to withstand hurricane force winds. To change the discount, companies must provide a detailed study showing that different discount rates are more appropriate.
?State Farm ran a model but did not have what we considered to be a detailed alternative study,? Miller said.
State Farm and Florida regulators are in the process of negotiating a two-year exit plan. Unable to obtain the premium increases it says it needs, the company in January said it would leave the state?s property insurance market over a two-year period once an acceptable withdrawal plan was approved.
State Farm has long offered discounts as a marketing tool. The discounts are voluntary, but must still be approved by OIR. The agency is also required to sign off if those discounts are discontinued, even though regulators have little or no authority to block the decision.
A company spokesman said eliminating the discounts is needed as the company responds to market conditions and its inability to convince regulators that higher premiums are needed.
?Right now what we?re focusing on is developing a plan to provide a soft landing for our customers and to allow them to continue to work through their agents,? said Justin Glover, a State Farm spokesman.
Formal hearings are scheduled to begin in October over State Farm?s exit plan, but Glover said the company continues to talk with agency officials to reach agreement before then.
Source: News Service of Florida, Michael Peltier
OIR approves portions of State Farm proposal, rejects others
TALLAHASSEE, Fla. ? Aug. 7, 2009 ? State regulators on Thursday approved a slate of requests from State Farm Florida Insurance Co. that will raise premiums for homeowners by an average of 28.4 percent.
The decision by the Office of Insurance Regulation (OIR), agency officials say, would result in additional premiums of $278 million for the company after all policies come up for renewals beginning Dec. 1.
But the rate increases will target only those customers who now benefit from a handful of voluntary discounts offered by State Farm, including premium breaks for policyholders who also insure their cars with the company, have a home security system or have not filed a claim in several years.
State insurance regulators, however, rejected a company request to reduce premium discounts it is required to offer customers who hurricane-proof their homes, saying the company must provide additional data before regulators will be willing to modify discounts already in place.
?They need to do some more work on that piece,? said Belinda Miller, OIR deputy commissioner.
State lawmakers recently enacted legislation requiring insurers to offer premium discounts for homes that are better able to withstand hurricane force winds. To change the discount, companies must provide a detailed study showing that different discount rates are more appropriate.
?State Farm ran a model but did not have what we considered to be a detailed alternative study,? Miller said.
State Farm and Florida regulators are in the process of negotiating a two-year exit plan. Unable to obtain the premium increases it says it needs, the company in January said it would leave the state?s property insurance market over a two-year period once an acceptable withdrawal plan was approved.
State Farm has long offered discounts as a marketing tool. The discounts are voluntary, but must still be approved by OIR. The agency is also required to sign off if those discounts are discontinued, even though regulators have little or no authority to block the decision.
A company spokesman said eliminating the discounts is needed as the company responds to market conditions and its inability to convince regulators that higher premiums are needed.
?Right now what we?re focusing on is developing a plan to provide a soft landing for our customers and to allow them to continue to work through their agents,? said Justin Glover, a State Farm spokesman.
Formal hearings are scheduled to begin in October over State Farm?s exit plan, but Glover said the company continues to talk with agency officials to reach agreement before then.
Source: News Service of Florida, Michael Peltier
Admin
State Farm Florida has dropped plans to withdraw from Florida's property insurance market. Florida Insurance Commissioner Kevin McCarty on Wednesday announced a settlement with the company that includes a 14.8 percent rate increase. State Farm Florida, the state's largest private homeowner insurer, will also be allowed to not renew 125,000 of its 810,000 policies.
SoWal Expert
Wow, we sure got the best of that deal! :roll:
They get to raise rates almost 15% AND dump 15% of their clients.
They get to raise rates almost 15% AND dump 15% of their clients.
Beach Lover
so if they raise 15% all other insurers will raise 15%
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