State Farm Requests Exit Meeting From Florida

State regulators have granted State Farm’s request to appeal the state-approved plan for the company’s withdrawal from Florida’s property insurance market.

The dispute between State Farm, Florida’s largest private property insurer, and the Office of Insurance Regulation has been referred to a judge at the state Division of Administrative Hearings.

In January, State Farm announced plans to drop all 1.2 million property insurance policies, including 700,000 homeowners, over two years. The announcement came after state regulators rejected the company’s request to raise rates 47 percent on average statewide.

The dispute centers on the way State Farm will shed those policies.

The state-approved plan requires State Farm to sell the policies to other private insurers and bars the company from dumping any policies into state-run Citizens Property Insurance Corp., Florida’s insurer of last resort.

But company policy prohibits State Farm agents from offering services to other private insurers. Agents can offer services only for State Farm and Citizens. State Farm said the practice is a major element of the company’s business model and isn’t willing to abandon it.

Allowing State Farm agents to offer services to other private insurers would impair the success of State Farm’s marketing program, the company says in its appeal of the state-approved plan.

Insurance regulation officials say the state’s plan would keep Citizens, already bloated with 1.1 million policies, from getting bigger. If Citizens gets bigger, the risk of taxpayers bearing the cost of a major hurricane would grow because all Florida policyholders can be assessed a surcharge to pay Citizens’ claims if it runs out of money.


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2009 Tampa Tribune, Fla.