Make us your home page

State Farm gets conditional approval to drop Florida property insurance policies

State Farm has the green light to pull out of Florida's property insurance market — as long as it meets a laundry list of demands from regulators.

Florida Insurance Commissioner Kevin McCarty said the "conditional'' approval granted Friday is meant to ensure that the exodus of the state's biggest property insurer isn't "hazardous'' to its policyholders and the public at large.

Among the biggest conditions, State Farm has to free up its agents to steer discarded policyholders to other private insurers so the state-run Citizens Property Insurance doesn't become a dumping ground. As "captive'' agents, State Farm's network of 800 agents statewide are compelled to write policies for State Farm first and, if they cannot place someone, turn to Citizens Property Insurance, the state-run insurer of last resort.

All told, State Farm is dropping about 1.2 million policies, 700,000 of them covering homeowners.

Citizens, which has about 1 million policies now, would be at greater risk of being unable to pay claims from a major hurricane if it continues to swell by hundreds of thousands of policies. Under state law, everyone who pays insurance premiums in Florida could be assessed to help Citizens pay claims beyond its reserves.

McCarty blasted State Farm for trying to "warehouse'' its unwanted policies in Citizens, saying it has already steered 143,000 policies in that direction.

"State Farm is trying to hold the people of Florida and their policyholders hostage, and we're not willing to do that,'' McCarty said in a conference call with reporters. "Citizens is already overtaxed with the policies they have.''

Among other conditions of the withdrawal:

• State Farm Florida must surrender its certificate of authority within 30 days, which effectively bans the company from writing new homeowners policies but not servicing existing policies.

• State Farm has to issue pro-rata refunds of premiums to any policyholder who voluntarily cancels or does not renew a policy.

State Farm spokesman Chris Neal said in a statement that the agency welcomes discussions with the state Office of Insurance Regulation "to create an orderly process that is best for our customers, our agents and the marketplace.'' He also indicated a "sincere hope'' to find a way for State Farm agents to service policies directly to insurers approved by the state.

State Farm has 21 days to decide whether to abide by McCarty's order or request an administrative hearing.

In its plan submitted to the state, State Farm said it wanted within two years to shed its policies affecting house and condo owners, renters and customers with coverage for personal liability, boats, personal articles and business property and liability. The Illinois-based insurance giant wants to hold on to its more lucrative lines in Florida, including its market-leading auto insurance and life insurance.

State Farm gets conditional approval to drop Florida property insurance policies 02/13/09 [Last modified: Friday, February 13, 2009 9:55pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. 'Road to Nowhere' is back: Next phase of Suncoast Parkway coming


    Despite intense public opposition and dubious traffic projections, the Florida Department of Transportation has announced that construction of the toll road known as "Suncoast 2" is expected to start in early 2018.

    The Suncoast Parkway ends at U.S. 98 just south of Citrus County. For years residents have opposed extending the toll road, a project dubbed the "Suncoast 2" into Citrus County. But state officials recently announced that the Suncoast 2 should start construction in early 2018. [Stephen J. Coddington  |  TIMES]
  2. A sports rout on Wall Street


    NEW YORK — Sporting goods retailers can't shake their losing streak.

  3. Grocery chain Aldi hosting hiring event in Brandon Aug. 24


    BRANDON — German grocery chain Aldi is holding a hiring event for its Brandon store Aug. 24. It is looking to fill store associate, shift manager and manager trainee positions.

  4. Lightning owner Jeff Vinik backs film company pursuing global blockbusters


    TAMPA — Jeff Vinik's latest investment might be coming to a theater near you.

    Jeff Vinik, Tampa Bay Lightning owner, invested in a new movie company looking to appeal to a global audience. | [Times file photo]
  5. Trigaux: Look to new Inc. 5000 rankings for Tampa Bay's future heavyweights


    There's a whole lotta fast-growing private companies here in Tampa Bay. Odds are good you have not heard of most of them.


    Kyle Taylor, CEO and founder of The Penny Hoarder, fills a glass for his employees this past Wednesday as the young St. Petersburg personal advice business celebrates its landing at No. 25 on the 2017 Inc. 5000 list of the fastest growing private companies in the country. Taylor, still in his 20s, wins kudos from executive editor Alexis Grant for keeping the firm's culture innovative. The business ranked No. 32 last year. [DIRK SHADD   |   Times]