STATE FARM TO STOP PROVIDING PROPERTY INSURANCE (USA)
Posted by Gilmour Poincaree on January 28, 2009
January 27, 2009
by Russel Ray – The Tampa Tribune
State Farm, the second-largest property insurer in Florida, said today that it will stop providing property insurance statewide, a move that would affect more than 1 million policyholders.
State Farm’s plan to drop policyholders was submitted to the Office of Insurance Regulation, which has 90 days to review the proposal.
“Nothing will happen until that review is complete,” said State Farm spokesman Chris Neal.
The plan calls for dropping policyholders over a two-year period beginning in November. State Farm has nearly 100,000 homeowner policies in Hillsborough and Pinellas counties.
The move comes two weeks after Florida Insurance Commissioner Kevin McCarty rejected State Farm’s request to raise rates 47 percent on average statewide.
State Farm said operating costs have risen along with the number of claims. What’s more, the insurer said state-mandated discounts for homeowners who strengthen their homes against hurricanes have slashed the company’s revenues.
“This is not an action we wanted to take, but one we must take given the realities of the Florida property insurance market,” Jim Thompson, president of State Farm Florida, said in a statement. “We regret the impact this will have on our customers, employees and agents in Florida.”
The move comes after Florida Insurance Commissioner Kevin McCarty recently rejected State Farm’s request to raise rates 47 percent on average statewide.
The cancellation of more than 1 million policies could deepen Florida’s insurance crisis and is sure to increase the policy count at state-run Citizens Property Insurance Corp., the state’s so-called insurer of last resort and the largest property insurer in the state.
“We have been hearing for months of possible plans to make such a move in Florida,” McCarty said in a statement. “I will do everything within my power to protect Florida consumers from unnecessary destabilization of the insurance market that this might cause.”
Reporter Russell Ray can be reached at (813) 259-7870