State Farm Leaving Florida!

We all knew that this day would come. Over the last several years, State Farm has been asking the Office of Insurance Regulation to allow them to raise premiums in order to stay profitable. When these requests were continuously declined, State Farm started a systematic process of non-renewing thousands of home insurance policies. The hope was that by non-renewing so many policies, their exposure would be reduced to a level where they could still pay claims if Florida gets hit with a bad hurricane season. Unfortunately, on 1/27/09 State Farm announced that they will not longer be writing property insurance in Florida. In addition, there is a good chance that they will be non-renewing $1.2 million property insurance policies over the next few years. Here are some bullet points from Florida Association of Insurance Agents:

• Effectively, State Farm Florida is handing in its Certificate of Authority, which includes the lines of homeowners, renters, condominium unit owners, personal liability, boats, personal articles, and business property and liability policies. However, the company anticipates no impact on the availability of State Farm auto insurance for Florida residents-nor the availability of life insurance, health insurance, and other financial services offered by agents of State Farm Mutual and its other affiliates.

• State Farm asserts current rates were insufficient to safely protect property insurance customers-a factor directly related to its inability to obtain regulatory approval of what it believes to be adequate property insurance rates. In July, it filed for an overall statewide homeowners insurance rate increase of 47.1 percent. This filing was disapproved on January 12 by the Office of Insurance Regulation.

• The company says it will utilize a two-year withdrawal to minimize disruption to the market and to its policyholders, which will also require regulatory review, and no action will be taken until the regulatory process is complete.

• Even without a hurricane, State Farm Florida's operating costs have risen as day-to-day claims have increased both in their number and severity. State-mandated discounts have further reduced needed revenues. During the first three quarters of 2008, even with no hurricanes, State Farm Florida lost $201 million in surplus.

• State Farm Florida, is a domestic carrier established in 1998 as a stand-alone company. After billions in losses in 2004, it borrowed $750 million from State Farm Mutual, but it has not been able to repay the note.

• State Farm Florida currently services approximately 1.2 million residential insurance and other related property insurance policies, and is headquartered in Winter Haven with agent and operations offices throughout the state. The State Farm Insurance Companies are represented by 826 agents and 4,479 agency staff members in the state of Florida, and employ 4,801 Floridians in various operational positions.