Florida Orders State Farm to Refund $120 Million for Mitigation Discounts

Florida Insurance Commissioner Kevin McCarty ordered State Farm Florida to issue credits or refunds totaling $120 million to current and former policyholders who did not apply for or who did not receive the windstorm loss reduction rating plan discount for making their homes more resistant to wind damage.

In addition, State Farm must pay a $1 million penalty to the Florida Insurance Regulatory Trust Fund.

The order follows a July notice to State Farm of an investigation by the Office of Insurance Regulation into whether the company was properly implementing the mitigation discount program. As a result of an internal review, State Farm identified about 98,000 current or former policyholders who will get credits or refunds.

State Farm policyholders, who are entitled to the refunds will receive a notice from the company. They include policyholders who have or had a homeowners, renters, condominium unit owners, apartment or condominium association policy.

Refunds will be credited to the renewal premium for all renewing policyholders entitled to the refund; or the company will issue a check. Former policyholders or those to whom State Farm has sent a nonrenewal notice prior to today will receive a check within 180 days. In addition, the refund must include 7 percent interest on the amount due to each policyholder until paid.

State Farm has 90 days to prepare the credit or refund process and 365 days for all credits or refunds to be issued. The company must then provide a signed certification, by a company officer, within 30 days of the date the last credit or refund is issued. The Office of Insurance Regulation will conduct a follow-up compliance audit in 12 months.

Source: Florida Office of Insurance Regulation

Topics Florida Legislation