State Farm is Staying in Florida
December 23, 2009 – 7:40 amI was more than a bit surprised to see the recent announcement that State Farm has decided to stay in the Florida homeowners insurance market. Early this year, the Florida insurance commissioner refused State Farm’s request for a 67% rate increase, and State Farm’s response was to “take their ball and bat and go home,” by choosing to non-renew its 800,000+ policyholders (it planned to still write auto insurance).
Well, Florida blinked, and hammered out a deal where State Farm would be allowed to non-renew about 125,000 policyholders (presumably on the coast), and raise rates by 15% on the rest. It looks like the soft economy is taking its toll on Florida’s balance sheet, and the political pain of allowing (in my opinion, justified) rate increases is starting to be outweighed by the growing potential of financial disaster. The state - through Citizens Property Insurance Corporation - is the largest homeowners insurer, and State Farm (which is the largest private homeowners insurer) would have dumped 800,000 more policies on Citizens. That’s a lot of additional risk that the state can’t afford to take.
Looks like the regulatory tide is turning in Florida. Floridians should brace themselves for more rate increases.
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