State Farms Seeks to Exit Fla. Residential Market

State Farm Mutual Automobile Insurance Co. says it will drop 1.2 million customers and leave Florida’s residential market after state regulators denied a request to raise prices recently.

The insurer pointed to risks from hurricanes and the rising cost of everyday claims submitted by the state’s homeowners. Surplus funds held by State Farm’s Florida unit dropped by $201 million in the first three quarters of 2008, a time frame when no hurricanes hit the state.

State Farm filed a plan with regulators to drop home customers over a two-year span while continuing to provide car, health and life insurance.

Florida Insurance Commissioner Kevin McCarty issued the following statement in response to State Farm's announced plans:

"Although this is disappointing news for Floridians, who have been loyal customers of State Farm, we are not surprised by State Farm's decision to stop offering all property insurance in Florida.

"We have been hearing for months of possible plans to make such a move in Florida, including a document submitted to the Office as recently as Dec. 5 as part of their recoupment filing that showed an anticipated reduction to 655,000 HO policies by 2010.

"We will carefully review State Farm's intended plans to ensure that they are in compliance with Florida law; and we will explore all legal options as well.

"I will do everything within my power to protect Florida consumers from unnecessary destabilization of the insurance market that this might cause and to ensure that Florida consumers are protected and have access to insurance at rates that are not excessive or unfairly discriminatory.

“It is important to note that we have been working with state Sen. Mike Fasano, R-New Port Richey, to develop legislation that will significantly limit the number of non-renewals a company can issue in a year.

"To help ease the transition of policies, Florida already has new companies who are eagerly looking to grow their businesses and will welcome the opportunity to add more customers. I encourage everyone to work closely with their agent to choose a new company that will offer needed coverage at a price you can afford.

“It also is important that State Farm customers understand that the Office must first approve State Farm’s plan. The Office has 90 days to do that. If approved, State Farm must then provide 180 days notice to customers before any policies can be non-renewed.”