State Farm Says It Will Reconsider Florida Exit If Rates Deregulated

June 22, 2009

Florida’s biggest private insurer of property, State Farm Florida, has told Gov. Charlie Crist it would “be willing to re-examine its options” and its decision to leave the state’s home insurance market if he signs a bill on his desk designed to deregulate rates for large insurance companies.

Jim Thompson, president, State Farm Florida, in a letter to Crist dated June 16, stressed that any change in his company’s current plan to leave the state would have to happen quickly due to the insurer’s compromised financial state. Ratings analysts at A.M.Best last week downgraded the insurer.

Thompson also said the state insurance department would have to be willing to implement the law right away in keeping with its sponsors’ intent.

Crist has until June 27 to either sign or veto the measure (HB 1171) that would allow large national carriers including State Farm to write property risks in the state using rates that are not reviewed by the state.

Smaller insurers, including a number of domestic start-ups, would still have their rates subject to state review.

State Farm Florida has said it must leave the state because Insurance Commissioner Kevin McCarty has not allowed it to charge prices it needs to remain solvent. It has filed a withdrawal plan with the Office of Insurance Regulation but the details of the plan are still in negotiation.

A.M. Best said State Farm Florida’s recent significant deterioration in earnings and risk-adjusted capitalization has been driven by a sharp decline in net premiums written due to nonrenewals, wind mitigation discounts, increased reinsurance costs, rate decreases and the suspension of writing most new homeowners and commercial business.

Crist, who has indicated he leans against signing the measure, has been advised by lawmakers who support it and McCarty who opposes it in the debate over HB1171. Business groups including the Chamber of Commerce have urged Crist to sign the bill, while consumer groups and a group representing domestic insurers have urged him to veto it.

Subscribe Insurance news headlines delivered to your email.
Get a free subscription to our popular email newsletter.

Latest Comments

  • June 29, 2009 at 3:43 am
    nobody important says:
    Actually, one of the major responsibilities of government is to make sure that companies are solvent in order to pay future claims. They have abrogated that responsibility in... read more
  • June 26, 2009 at 1:51 am
    THE CONUSUMER says:
    WE IS THE CONUSUMER. There is no need for a federal consumer protection agency .;Insurance regulators and insurers told Congress.; Bull just ask the poor people who had to fig... read more
  • June 26, 2009 at 1:50 am
    Only the big pocket donors are says:
    I agree that congress needs to work for consumers. However that has not been the case for years. Only the big pocket donors are supported, regardless of the political party in... read more
See all comments

Add a Comment

Your email address will not be published. Required fields are marked *

*

More News
More News Features