Fla. Permits State Farm to Leave With Conditions

Florida insurance officials have given the go-ahead to a plan by State Farm to leave the state's property insurance market with one catch. If State Farm wants to leave, it may not dump policyholders into a state-run pool.

The company announced recently that it was leaving the state's property insurance market over the next two years as a result of state officials saying no to a proposed 47 percent rate increase by the insurer. State Farm said the rate increase was necessary to deal with hurricane risks.

Florida Insurance Commissioner Kevin McCarty has approved State Farm's plan to stop renewing 1.2 million property insurance policies, but only with several major conditions he labels as needed to make for a smooth transition.

Along with avoiding dumping policyholders into a state-run pool, State Farm would be required to allow its agents to sell policies underwritten by other private insurers. The company would also be required to issue pro-rated refunds of premiums to policyholders who cancel State Farm policies on boats and autos along with property.

“I could not approve the withdrawal plan State Farm submitted, because, as Florida law states, I believe that plan was ‘hazardous’ to State Farm policyholders and to the public,” said McCarty. “State Farm intended to dump all of its customers into Citizens; and that is not acceptable for their customers or for the people of Florida. We have private companies that are eager to grow their businesses, and I expect State Farm to fully cooperate in facilitating a smooth transition of their policyholders to those companies."

As a result of the latest actions, the insurer now has 21 days to determine whether to accept McCarty's order or file a petition asking for an adminstrative hearing with McCarty's office.