State Farm Insurance to stay in Florida Home Market

2009 December 16

State Farm Florida Insurance Company has dropped plans to withdraw from Florida’s property insurance market. State Farm will continue providing property insurance coverage in Florida, although the company will insure fewer homeowners and will charge more for its insurance.

Florida Insurance Commissioner Kevin McCarty on Wednesday announced a settlement with State Farm to remain in the Sunshine State — the deal allows the company to increase insurance rates by 14.8%.

“State Farm is withdrawing its withdrawal,” McCarty said. Under the agreement, State Farm will keep 680,000 policies of its 810,416, or about 84%, homeowners it covers in Florida — reducing potential losses from a catastrophic hurricane.

The agreement is the product of a “long and arduous negotiation process,” McCarty, Florida insurance commissioner, said in the release. McCarty said the final results benefit both the people of the state and the Florida insurance marketplace.

The agreement, which ended a months-long standoff with regulators at the Florida Office of Insurance Regulation. In January, State Farm Insurance announced it would exit Florida so far as property policies because McCarty and his agency rejected State Farm a much larger 47% rate increase.

State Farm Florida will non-renew no more than 125,000 policies of its 810,416 residential property policies reported as of October. State Farm Florida has to give 180 days notice of non-renewal, and the process will take place over a one-year period.

Even after these non-renewals, State Farm will remain the largest private insurer of property insurance risk in the state, a release from insurance regulators said.

State Farm said in February it had a $542 million loss in 2008, its first in six years, after paying catastrophe claims when Hurricanes Ike and Gustav struck the U.S. Gulf Coast.

The industry spent $27 billion on natural disasters in 2008, the costliest year since 2005, when Hurricane Katrina hit.

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