Florida Attaches Major Conditions to State Farm Withdrawal

Florida Insurance Commissioner Kevin McCarty has offered his own plan for State Farm Florida Insurance Co.’s withdrawal from the state that includes conditions not in the insurers’ own plan.

McCarty wants State Farm Florida to permit its 826 contracted agents to place some of the 1.2 million policies it is dropping with other carriers and he wants to prohibit the insurer from placing any of the business in state-backed Citizens Insurance.

The insurer would have to issue pro-rata refunds to those seeking to voluntarily cancel and would not be allowed to short-rate any policy including auto.

Also, the Office of Insurance Regulation would pull State Farm Florida’s authority to write business in 30 days, rather than waiting until the end of the two-year plan as State Farm proposed.

State Farm’s own timetable calls for it to nonrenew about 470,000 property policies over the next year, policies it describes as presenting “the highest contribution to the company’s probable maximum loss.” It promises its agents would help insureds obtain coverage with Citizens, but McCarty wants to block this option.

State Farm also wants to nonrenew all of its 58,000 boatowners policies in the first year. All other policies would be nonrenewed in the second year.

State Farm has previously rejected a call to let its agents place customers with other insurers. But it did not close the door on working with OIR on a solution to the agent situation. “It is our sincere hope that we can work with the OIR to establish a way for State Farm agents to service policies directly out of State Farm Florida into OIR-approved companies,” Chris Neal, State Farm Florida’s public affairs manager, said.

McCarty believes there are private carriers “ready, willing and able” to take up the business and said he would not have approved a withdrawal if he did not have confidence that private insurers could cover the risks. He said he has spoken with 15 carriers interested in from 50,000 up to as many as 500,000 policies each. “We have ample capacity in the private sector and believe most policyholders will be able to be placed at rates as good as State Farm’s or better,” he said.

State Farm has several weeks to review the plan and the right to appeal it.

Business Being Dropped by State Farm Florida

Source: Withdrawal Plan for State Farm Florida Insurance Co.

Topics Florida Carriers Agencies