State Farm Insurance Co. has decided to discontinue writing new flood insurance policies with the National Flood Insurance Program but the company says it will still service existing policies, and State Farm agents will continue to sell flood coverage through the NFIP’s direct distribution channel.
State Farm spokesman Phil Supple told Insurance Journal that recent disruptions in the federally backed flood insurance plan, including the current moratorium on writing new policies, contributed to the company’s decision to pull out but those disruptions are not the only reasons. The company wants to concentrate on its core business and products.
State Farm has a little more than 800,000 flood policies, Supple said, and the amount of paperwork involved when disruptions occur in the NFIP is overwhelming for the carrier.
Supple said even if Congress were to reauthorize the flood program for an extended period of time, which groups like the Professional Insurance Agents of America and the Independent Insurance Agents and Brokers of America support, State Farm would most likely not re-enter the market. The program distracts and pull resources away from other needs of the company, he said.
“Moving these policies to NFIP Direct will let us concentrate on our customers needs, on our products,” Supple said.
State Farm plans to change its participation in the NFIP beginning Oct. 1, 2010.
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