Now the ball's in State Farm's court with 1-million of its policyholders in Florida keenly watching its move.
As anticipated, Florida Insurance Commissioner Kevin McCarty today formally rejected State Farm Florida's bid for a 47 percent hike in property insurance rates. That means a 9 percent rate reduction that became effective in accordance with an Oct. 1, 2007, agreement with the state remains in effect.
McCarty initially rejected State Farm's rate request last year, an order that was appealed by State Farm to an administrative law judge in Tallahassee. That judge, Daniel Manry, rejected State Farm's arguments that it could have justified even larger rate increases. In his decision today, McCarty affirmed Manry's ruling, saying it "will further help us in our endeavors to protect Florida consumers from unwarranted rate increases."
State Farm officials earlier warned of potentially dire consequences if they were turned down — that they may have to shed a large number of policies or even pull out of Florida.
But the insurer today declined to say if it planned to appeal McCarty's decision to the First District Court of Appeals within 30 days or take more austere measures.
"We're very disappointed with (the Florida Office of Insurance Regulation's) decision not to grant rate relief," State Farm spokesman Chris Neal said. "We believe the facts we presented should have led to a different outcome."
Neal said the rejection forces State Farm "to take a hard look at how we operate in what's a rapidly deteriorating situation."
With about 1-million property insurance policies in Florida, State Farm of Bloomington, Ill., is by far the state's biggest private insurer, second only to state-run insurer of last resort Citizens Property Insurance.
Jeff Harrington can be reached at [email protected] or (727) 893-8242.