If I were State Farm my tactic would be to switch this all around… Ask the state why they should continue to write business in such an insurance unfriendly state.
Senator: Why are you leaving the State of Florida?
State Farm: Because we can’t make any money
Senator: Since when was that important. What about the poor victims in this case, your former customers?
State Farm: You insure them senator, Florida has an unlimited appetite and budget for catastrophic risk. I don’t think the taxpayers will mind at all. Good luck.
The only way Citizens Ins can keep underpricing policies is for another major hurricane to never hit FL. When the inevitable happens, whether in 2009 or not for another 10-20 years, every taxpayer will wind up paying for the claims because Citizens will be insolvent and the Feds will have to pick up the slack.
What expenses are they paying that costs them so much. I am told it is reinsurance and that they buy it from themselves. If true that seems a little sneaky. I have to pay myself to cover my claims and that costs too much. State Farm of Florida is still State Farm. I am betting they end up staying. Poor agents though. Can’t keep clients by placing them elsewhere so at least they can continue to make a living. Nice of the company to be so helpful to their agents.
For those of you that claim State Farm Florida is making money, read the following excerpt from that article
****
Insurers’ profits stem from two areas: underwriting property; and investing the money they get from policyholders. The financial meltdown has eliminated their investment income. Now, as State Farm sees it, intrusive Florida politicians and bureaucrats have made it nearly impossible to make money from underwriting, their other income source.
“When markets are doing well, there’s more opportunity to get investment returns. When markets are bad, there is no cushion at all,” Ferguson said. “If they can’t make money underwriting, then where is the income?”
State Farm Florida president Jim Thompson said the firm loses $20 million a month on its property business, paying out $1.21 for every dollar coming in.
“When you look at our financial situation, we have no alternative,” Thompson said. “We’re going to be out of this business. We will not have the resources to pay claims.”
****
Don’t you see what they are doing? By running all private insurers out of the state and getting the Florida government to insure everything with nothing to back it up, when the inevitable does happen the federal government (all tax payers) will pay. This is how they will get the rest of the country to subsidize Floridas inadequate rate. Without passing any legislation. Brillaint. Socialism is a coming to a town near you.
I guess if SF says their not making money then only they would know. It seems like if they were making money with their current rate structure then it wouldn’t make sense to leave the state and/or create the huge amount of bad press over this.
They certainly can manipulate expense data to indicate they are unprofitable. However it wouldn’t be a surprise if their reserving methods, coverage options, and age of the homes in their book of business creates a different expense structure than the new Florida “startups” are incurring.
I read that article too. What I don’t quite understand is that State Farm of Florida is paying for reinsurance from State Farm. So, some of that $1.21 for every dollar earned is going back to State Farm. How can that be a real expense? Or is this a false rumor? The way I heard it is they created State Farm of Florida so they can show they lose money in Florida to justify rate increases while the parent company makes profits. They cannot possibly claim they are losing money in all States. I am more curious about this than worried. I just feel badly for their agent force as they seem to be getting no support from their employer. Allstate and Nationwide agents can sell for other companies in Florida which allows them to make a living.
Give State Farm the 47% rate increase they want and let the free market system work. If they want to price themselves out of the market, let them. Their customers will go someplace else once the price gets so high they cannot afford the coverage. Why the state wants to control the cost of a product, I do not know.
State Farm took the position several years ago when the “startup, Florida domestics” were able to show much less surplus and use the CAT fund as their backstop. SF, Allstate and Nationwide decided if they started their own Florida only company- they could take advantage of this as well and not have to worry about their catastrophic exposure in Florida bleeding the profits from State Farm(the parent company). The State should have encouraged competition in this state instead of suppressing rates. If they had done this years ago- more national and regional carriers would be writing business in Florida. The OIR and Governor’s office is not interested in fixing the problem- only in sound bites and appearing to be for the average citizen. The State of Florida should not be setting the rates or determining the adequacy of any companies rates- let the market do that.
That if SF were making money (even on the reinsurance) they would stay? I don’t know any company, especially in this market, that walks away from a cash cow. It just doesn’t happen, how would you explain that to the board?. Given our current environment, if it’s making money, it’s golden, if it’s losing money, its gone.
State Farm changed to State Farm Florida about 10 years ago. Previously the coverage written was through State Farm Fire and Casualty and State Farm General, both national companies at the time.
Since State Farm Florida is now a different company, State Farm Mutual, the auto company, underwrites the reinsurance and charges State Farm Florida a hefty fee thus showing a much higher cost of doing business while still pocketing it themselves.
State Farm holds their agents captive through contract by claiming the names and addresses of policyholders are the trade secret of State Farm. Because of this “alleged” trade secret State Farm will not allow their agents to write business for another insurance company, even though State Farm no longer wants the business.
Now why would State Farm deny their agents the ability to write fire business with other companies if they are no longer going to write fire business in Florida?
It appears State Farm is once again using the threat of leaving a state to get a rate increase. All one has to do is look at New Jersey and see the same tactic was used by State Farm. It was also State Farm’s way to squeeze out many longtime agents as well as get a rate increase for the company. Same thing here in Florida.
This is the company that calls itself the “Good Neighbor”! What kind of “good” neighbor would say he or she didn’t want your business but they didn’t want anyone else to have it either?
If this is how State Farm treats its policyholders and agents then maybe they shouldn’t be allowed to write any business in Florida (Auto, Life, Health or national flood business as well). It would seem very easy to have the legislature pass a bill requiring any company writing any of those coverages must also provide fire insurance coverage. And in addition to that it should be required that once a fire policy is written it cannot be cancelled except for non payment of premium or for certain increases in exposure (hurricane could not be one of the reasons for cancellation).
Think about it, a person purchases a home and usually has a 30 yr mortgage and part of the mortgage requirement is that fire coverage be maintained. Shouldn’t a bank require a guarantee of non-cancellation from the insurance company? The company underwrites the home before insuring it so they know the risk.
I would find it much easier to believe State Farm’s statement of being in debt if they were not paying themselves for reinsurance. If that money went to Lloyds or some other reinsurer then I could see it. I think it is not so much that Florida is a cash cow as it is that State Farm wants a bigger cash cow. I do agree the State should not regulate pricing so much since we now have more companies doing business to create competative prices. Anyway, it seems odd and with all the rumors out there it is hard to tell what is going on. I know a few agents from State Farm and I know they are not happy with how things are going.
In this case Crist is correct – one of his running platforms to get elected was just proven – State Farm of FLORIDA cannot make any profit – State Farm MUTUAL (the holding co of all other State Farm subsidiaries countrywide) I’m sure is quite profitable – Crist wanted these small “subidiary” offshoots to be dissolved-If actuaries could figure loss/profit based on COUNTRYWIDE STATE FARM MUTUAL numbers, the poor Florida State Farm Agents could stay in the game – maybe this sounds socialistic BUT how State Farm Florida has set their own statistics is ONLY BASED on FLORIDA risk-Citizens rates are HIGH on the coast – I’d gladly switch my homeowners out of Citizens but won’t until I’m not being offered a take out company that will probably end up like S Family –
If I recall, company’s other state results can’t be brought into play with Florida rate filings. If the company is losing in a line overall and making money in Florida, the State will not allow that loss to be reflected. If the rates are too low to cover costs in Florida, the State should consider the profitability of the company overall? Can’t have it both ways. I think that the pup company situation is based more on the ability to separate the pup from the parent when (definitely when) the next catastrophic storm season hits and the Citizens assessments go through the roof. All the political garbage that the public has swollowed down there is coming back to hurt them. All you will have are Citizens and underfunded start up companies for property soon. Too bad for you.
Reality is property insurers in FL are forced by the regulatory framework and competitive landscape in FL to write insurance at prices below their costs.
Come on folks–the SF org is not a stock company out to provide a great return to shareholders or line exec pockets thru options and excessive comp.
I’ve sold stuff to them—they are prudent business people with a very long term perspective. They are leaving becuase we do not have nor can forsee having a regulatory environment and framework that will enable them to break even over the long term much less earn a profit.
I would bet that most of us in FL pay less today for insurance than we did in 2005–even after the storms that year..
salaries.
We lose the gorilla and are left with a lot of monkeys who we simultaneously hope will charge low rates and be there to pay our losses… Look at the balance sheets and the people behind any carrier you use in lieu of the Good Neighbor.
Bottom line is a good part of Florida is really an uninsurable risk. If companies could charge adequate rates on the coast people could not afford to live there and rightly so. IF YOU WANT CHEAP INSURANCE RATES DON’T LIVE IN A HAZARDOUS AREA. Statefarm or any other company will never be able to charge enough to make a profit and people who choose not to live in florida should not have to subsidize their rates. You have to pay for that warm climate.
The state will always be a loss leader and coupled with the fact that it is un-friendly to insurance companies, the decision to pullout is a sound one. Face it, Florida is a flatland with no barrier islands that always has been and always will be in the zone of danger for hurricanes and the floods and tornadoes that follow them. In their short-sighted wisdom, homeowners and buyers refuse to pay an additional $400 for hurrican straps that have been proven to hold a roof on thus preventing significant damage. But no, why should they? Because they have insurance. You can bet other parts of the country have been subsidizing the premiums in Florida. State Farm finally hit the end of it’s willingness to put up with it.
The next pullout will be automobile insurance. Miami, Dade, Broward, and West Palm Beach are killing rates with their high percentage of personal injury attornies playing on the immigrants. Read the papers, watch TV, listen to the radio. They advertise everywhere. Some even have buses to transport their clients to local doctors for treatment. Alas, the golden goose has died.
I don’t think State Farm Mutual reinsures State Farm Florida. If this were the case, they wouldn’t have had to borrow money from Mutual after the hurricanes, it would have been reinsurance recoverables. State Farm Mutual didn’t want the Florida risk, that’s the reason SF Florida was created in the first place. So, it doesn’t follow logic, what you’re saying. That Mutual wanted off the risk yet they’re reinsuring SF Florida? No, that’s not how it works. However, Mutual DID throw them a bone when SF Florida needed a hand. But, it was a loan.
Has everyone forgotten about the sink hole problem in Florida? How about the thunderstorms? The economy (higher theft losses)? Lightening? Florida is a high risk state WITHOUT hurricanes.
Why not let them charge what ever they want. You can either pay the renewal or change carriers. Florida’s Governor(Charlie Crist) makes Blogovich look smart.
State Farm Mutual reinsures State Farm Florida look in the records! Reinsurance is set for a specific amount of coverage after a large deductible. State Farm indeed does reinsure the Florida company and they are charging a very nice premium to themselves to do it. Is there anyone who doesn’t understand the reinsurance premiums can be manipulated to make State Farm Florida look like State Farm wants it to?
If they are so profitable, why do they want out? If they are so much more expensive than the unfunded startup companies, why are they #1 in property? Use some sense here. Numbers show that companies do not make money in Florida property and the state is artificially surpressing rates. The system is a political scheme for votes, not a viable insurance mechanism. A lot of people in Florida are hopefully beginning to understand the situation.
800 plus agents that cannot sell their own product and can’t sell other’s. And their spokesman says they are “independent contractors”. Har dee har har.
Any insurance agent reading this article needs to be familiar with the names Pyorre and Weir. And then they need to re-read their own contracts.
Signed,
Independent, loving it, and in the words of Dr. Martin Luther King Jr., “Free at last, free at last, thank god almighty I’m free at last.”
I disagree. There will always be someone to take Statefarms place if their rates are too high and there will certainly be people standing in line to buy the firesale properties in Fla. Let the free market work. What if Fla. legislature told the cars comp[anies they were charging too much money for the cars sold in Fla and they needed to roll bac their prices, 20%? I know no new cars in Fla. The gerbment eeds to stay out f the free enterprise system. They are the problem.
You almost answered your own question Madhatter, as to why the State of Florida seems to demonstrate a compelling interest in controlling the retail cost of wind coverage – “Their customers will go someplace else once the price gets so high they cannot afford the coverage.” In this day and age that translates to jacking up the foreclosure rate even more from it’s currently giddy heights. I agree with the State – something needs to be done so Florida does not become a wasteland of overgrown, abandoned homes. You might want to take a good look around Louisiana at “overgrown, abandoned homes” and reconsider your views Madhatter.
The issue of forecloses is not State Farm’s concern. Their issue is of providing insurance coverage at a means that entitles them to a fair rate of return and the ability to pay future claims. They are not expected to subsidize homeowners in Florida, or any state that causes them to lose money on the product they sell. It appears they cannot make that fair rate of return, so they are choosing to leave. If you want to talk foreclosure issues, go to Tallahassee or Washington.
The State of Florida wants to control the price of homeowners insurance due to 1 reason and 1 reason only. Politics. Crist believes this issue will help take him national and so far it appears to be working. He better hope he is long gone before the wind blows again down here. Once the people in Florida find out what he has burdened them with- there could be a mass exodus abandoning homes here anyway. Fortunately, most people feel like the State of Florida will end up in Washington asking for their own bailout.
Everyone needs to calm down and look at this issue with some good, old fashioned logic as opposed to emotion or what appears to be chic State Farm hatred.
Many posters accuse State Farm – both the Florida pup and the mutual parent – of being greedy and/or manipulative. This is done by accusing them of cooking the books and/or paying the parent mutual a handsome sum for reinsurance.
However, these accusations are being made in the midst of the company’s decision to leave the state while they are supposedly bilking Florida residents / policyholders in order to make this obscene profit.
Therefore, in addition to being greedy, I guess State Farm is also extremely stupid since they are walking away from a situation in which they are making an obscene profit.
Come on, people. State Farm is in business to make money. If they are truly making money, then they would stay in Florida. If they are truly making and too stupid to realize it, then the business they are walking away from will be there for the taking by remaining carriers chomping at the bit to increase marketshare and get in on the action.
This falls into the category of “be careful what you wish for.” The state has villified State Farm and even invited them, if I recall, to leave the state along with other carriers not with the Crist program. State officials should be overjoyed now that this insurance Lucifer, otherwise known as State Farm, has decided to spare Florida citizens of further unfair business practices.
Everyone might just be wishing for the good old days when State Farm was around, though, the next time the wind blows.
Here’s my SF story, just to understand why some of us Florida SF customers are frustrated with SF:
I had a windstorm inspection done on my home. Sent it off to my SF agent. Few weeks go by and I get a call telling me that my insurance will go down $800 per year. Main discount was due to hip roof, new roof and year of construction (2000).
I was both happy and pissed. Why pissed? Well, when I purchased the home in 2001, SF sent out someone to inspect the house and take pictures… Which means, they knew my home’s construction details back in 2001?
My insurance for my home went from $650 per year to $2300 per year during that timeframe. To keep costs down I went from $250 deductible to $1000 and dropped personal coverage by 50%. Don’t forget the $4000 deductible for windstorm. No coverage for mould, sinkholes, and a bunch of other stuff.
So, what do I think of SF? Let’s say I have quote requests out for all my SF policies (home, boat, cars, RV and life)
and will be dropping them. Doesn’t matter if they stay or if they leave or if it costs more. I’ve had it with SF’s
BS.
If I were State Farm my tactic would be to switch this all around… Ask the state why they should continue to write business in such an insurance unfriendly state.
Senator: Why are you leaving the State of Florida?
State Farm: Because we can’t make any money
Senator: Since when was that important. What about the poor victims in this case, your former customers?
State Farm: You insure them senator, Florida has an unlimited appetite and budget for catastrophic risk. I don’t think the taxpayers will mind at all. Good luck.
The question asked has to be one of the dumbest ever asked by a politician. Why stay? State Farm has been their favorite whipping boy for years.
The only way Citizens Ins can keep underpricing policies is for another major hurricane to never hit FL. When the inevitable happens, whether in 2009 or not for another 10-20 years, every taxpayer will wind up paying for the claims because Citizens will be insolvent and the Feds will have to pick up the slack.
What expenses are they paying that costs them so much. I am told it is reinsurance and that they buy it from themselves. If true that seems a little sneaky. I have to pay myself to cover my claims and that costs too much. State Farm of Florida is still State Farm. I am betting they end up staying. Poor agents though. Can’t keep clients by placing them elsewhere so at least they can continue to make a living. Nice of the company to be so helpful to their agents.
I’ll repost what I said in another article regarging this topic.
IJ was kind enough to post an article on 02-03-09 titled “AP Analysis: Florida Insurance Bind Overshadows Louisiana” http://www.insurancejournal.com/news/southcentral/2009/02/03/97550.htm
For those of you that claim State Farm Florida is making money, read the following excerpt from that article
****
Insurers’ profits stem from two areas: underwriting property; and investing the money they get from policyholders. The financial meltdown has eliminated their investment income. Now, as State Farm sees it, intrusive Florida politicians and bureaucrats have made it nearly impossible to make money from underwriting, their other income source.
“When markets are doing well, there’s more opportunity to get investment returns. When markets are bad, there is no cushion at all,” Ferguson said. “If they can’t make money underwriting, then where is the income?”
State Farm Florida president Jim Thompson said the firm loses $20 million a month on its property business, paying out $1.21 for every dollar coming in.
“When you look at our financial situation, we have no alternative,” Thompson said. “We’re going to be out of this business. We will not have the resources to pay claims.”
****
Don’t you see what they are doing? By running all private insurers out of the state and getting the Florida government to insure everything with nothing to back it up, when the inevitable does happen the federal government (all tax payers) will pay. This is how they will get the rest of the country to subsidize Floridas inadequate rate. Without passing any legislation. Brillaint. Socialism is a coming to a town near you.
I guess if SF says their not making money then only they would know. It seems like if they were making money with their current rate structure then it wouldn’t make sense to leave the state and/or create the huge amount of bad press over this.
They certainly can manipulate expense data to indicate they are unprofitable. However it wouldn’t be a surprise if their reserving methods, coverage options, and age of the homes in their book of business creates a different expense structure than the new Florida “startups” are incurring.
I read that article too. What I don’t quite understand is that State Farm of Florida is paying for reinsurance from State Farm. So, some of that $1.21 for every dollar earned is going back to State Farm. How can that be a real expense? Or is this a false rumor? The way I heard it is they created State Farm of Florida so they can show they lose money in Florida to justify rate increases while the parent company makes profits. They cannot possibly claim they are losing money in all States. I am more curious about this than worried. I just feel badly for their agent force as they seem to be getting no support from their employer. Allstate and Nationwide agents can sell for other companies in Florida which allows them to make a living.
Give State Farm the 47% rate increase they want and let the free market system work. If they want to price themselves out of the market, let them. Their customers will go someplace else once the price gets so high they cannot afford the coverage. Why the state wants to control the cost of a product, I do not know.
State Farm took the position several years ago when the “startup, Florida domestics” were able to show much less surplus and use the CAT fund as their backstop. SF, Allstate and Nationwide decided if they started their own Florida only company- they could take advantage of this as well and not have to worry about their catastrophic exposure in Florida bleeding the profits from State Farm(the parent company). The State should have encouraged competition in this state instead of suppressing rates. If they had done this years ago- more national and regional carriers would be writing business in Florida. The OIR and Governor’s office is not interested in fixing the problem- only in sound bites and appearing to be for the average citizen. The State of Florida should not be setting the rates or determining the adequacy of any companies rates- let the market do that.
That if SF were making money (even on the reinsurance) they would stay? I don’t know any company, especially in this market, that walks away from a cash cow. It just doesn’t happen, how would you explain that to the board?. Given our current environment, if it’s making money, it’s golden, if it’s losing money, its gone.
State Farm changed to State Farm Florida about 10 years ago. Previously the coverage written was through State Farm Fire and Casualty and State Farm General, both national companies at the time.
Since State Farm Florida is now a different company, State Farm Mutual, the auto company, underwrites the reinsurance and charges State Farm Florida a hefty fee thus showing a much higher cost of doing business while still pocketing it themselves.
State Farm holds their agents captive through contract by claiming the names and addresses of policyholders are the trade secret of State Farm. Because of this “alleged” trade secret State Farm will not allow their agents to write business for another insurance company, even though State Farm no longer wants the business.
Now why would State Farm deny their agents the ability to write fire business with other companies if they are no longer going to write fire business in Florida?
It appears State Farm is once again using the threat of leaving a state to get a rate increase. All one has to do is look at New Jersey and see the same tactic was used by State Farm. It was also State Farm’s way to squeeze out many longtime agents as well as get a rate increase for the company. Same thing here in Florida.
This is the company that calls itself the “Good Neighbor”! What kind of “good” neighbor would say he or she didn’t want your business but they didn’t want anyone else to have it either?
If this is how State Farm treats its policyholders and agents then maybe they shouldn’t be allowed to write any business in Florida (Auto, Life, Health or national flood business as well). It would seem very easy to have the legislature pass a bill requiring any company writing any of those coverages must also provide fire insurance coverage. And in addition to that it should be required that once a fire policy is written it cannot be cancelled except for non payment of premium or for certain increases in exposure (hurricane could not be one of the reasons for cancellation).
Think about it, a person purchases a home and usually has a 30 yr mortgage and part of the mortgage requirement is that fire coverage be maintained. Shouldn’t a bank require a guarantee of non-cancellation from the insurance company? The company underwrites the home before insuring it so they know the risk.
I would find it much easier to believe State Farm’s statement of being in debt if they were not paying themselves for reinsurance. If that money went to Lloyds or some other reinsurer then I could see it. I think it is not so much that Florida is a cash cow as it is that State Farm wants a bigger cash cow. I do agree the State should not regulate pricing so much since we now have more companies doing business to create competative prices. Anyway, it seems odd and with all the rumors out there it is hard to tell what is going on. I know a few agents from State Farm and I know they are not happy with how things are going.
In this case Crist is correct – one of his running platforms to get elected was just proven – State Farm of FLORIDA cannot make any profit – State Farm MUTUAL (the holding co of all other State Farm subsidiaries countrywide) I’m sure is quite profitable – Crist wanted these small “subidiary” offshoots to be dissolved-If actuaries could figure loss/profit based on COUNTRYWIDE STATE FARM MUTUAL numbers, the poor Florida State Farm Agents could stay in the game – maybe this sounds socialistic BUT how State Farm Florida has set their own statistics is ONLY BASED on FLORIDA risk-Citizens rates are HIGH on the coast – I’d gladly switch my homeowners out of Citizens but won’t until I’m not being offered a take out company that will probably end up like S Family –
If I recall, company’s other state results can’t be brought into play with Florida rate filings. If the company is losing in a line overall and making money in Florida, the State will not allow that loss to be reflected. If the rates are too low to cover costs in Florida, the State should consider the profitability of the company overall? Can’t have it both ways. I think that the pup company situation is based more on the ability to separate the pup from the parent when (definitely when) the next catastrophic storm season hits and the Citizens assessments go through the roof. All the political garbage that the public has swollowed down there is coming back to hurt them. All you will have are Citizens and underfunded start up companies for property soon. Too bad for you.
Reality is property insurers in FL are forced by the regulatory framework and competitive landscape in FL to write insurance at prices below their costs.
Come on folks–the SF org is not a stock company out to provide a great return to shareholders or line exec pockets thru options and excessive comp.
I’ve sold stuff to them—they are prudent business people with a very long term perspective. They are leaving becuase we do not have nor can forsee having a regulatory environment and framework that will enable them to break even over the long term much less earn a profit.
I would bet that most of us in FL pay less today for insurance than we did in 2005–even after the storms that year..
salaries.
We lose the gorilla and are left with a lot of monkeys who we simultaneously hope will charge low rates and be there to pay our losses… Look at the balance sheets and the people behind any carrier you use in lieu of the Good Neighbor.
Bottom line is a good part of Florida is really an uninsurable risk. If companies could charge adequate rates on the coast people could not afford to live there and rightly so. IF YOU WANT CHEAP INSURANCE RATES DON’T LIVE IN A HAZARDOUS AREA. Statefarm or any other company will never be able to charge enough to make a profit and people who choose not to live in florida should not have to subsidize their rates. You have to pay for that warm climate.
The state will always be a loss leader and coupled with the fact that it is un-friendly to insurance companies, the decision to pullout is a sound one. Face it, Florida is a flatland with no barrier islands that always has been and always will be in the zone of danger for hurricanes and the floods and tornadoes that follow them. In their short-sighted wisdom, homeowners and buyers refuse to pay an additional $400 for hurrican straps that have been proven to hold a roof on thus preventing significant damage. But no, why should they? Because they have insurance. You can bet other parts of the country have been subsidizing the premiums in Florida. State Farm finally hit the end of it’s willingness to put up with it.
The next pullout will be automobile insurance. Miami, Dade, Broward, and West Palm Beach are killing rates with their high percentage of personal injury attornies playing on the immigrants. Read the papers, watch TV, listen to the radio. They advertise everywhere. Some even have buses to transport their clients to local doctors for treatment. Alas, the golden goose has died.
WK and others…
I don’t think State Farm Mutual reinsures State Farm Florida. If this were the case, they wouldn’t have had to borrow money from Mutual after the hurricanes, it would have been reinsurance recoverables. State Farm Mutual didn’t want the Florida risk, that’s the reason SF Florida was created in the first place. So, it doesn’t follow logic, what you’re saying. That Mutual wanted off the risk yet they’re reinsuring SF Florida? No, that’s not how it works. However, Mutual DID throw them a bone when SF Florida needed a hand. But, it was a loan.
Has everyone forgotten about the sink hole problem in Florida? How about the thunderstorms? The economy (higher theft losses)? Lightening? Florida is a high risk state WITHOUT hurricanes.
Why not let them charge what ever they want. You can either pay the renewal or change carriers. Florida’s Governor(Charlie Crist) makes Blogovich look smart.
State Farm Mutual reinsures State Farm Florida look in the records! Reinsurance is set for a specific amount of coverage after a large deductible. State Farm indeed does reinsure the Florida company and they are charging a very nice premium to themselves to do it. Is there anyone who doesn’t understand the reinsurance premiums can be manipulated to make State Farm Florida look like State Farm wants it to?
If they are so profitable, why do they want out? If they are so much more expensive than the unfunded startup companies, why are they #1 in property? Use some sense here. Numbers show that companies do not make money in Florida property and the state is artificially surpressing rates. The system is a political scheme for votes, not a viable insurance mechanism. A lot of people in Florida are hopefully beginning to understand the situation.
Like a good neighbor, State Farm is there…
Uh, WAS THERE.
800 plus agents that cannot sell their own product and can’t sell other’s. And their spokesman says they are “independent contractors”. Har dee har har.
Any insurance agent reading this article needs to be familiar with the names Pyorre and Weir. And then they need to re-read their own contracts.
Signed,
Independent, loving it, and in the words of Dr. Martin Luther King Jr., “Free at last, free at last, thank god almighty I’m free at last.”
Dear Thoughtful, You do not have to use much brain power in solving this problem. Get the politicians out of this and let the market decide.
I disagree. There will always be someone to take Statefarms place if their rates are too high and there will certainly be people standing in line to buy the firesale properties in Fla. Let the free market work. What if Fla. legislature told the cars comp[anies they were charging too much money for the cars sold in Fla and they needed to roll bac their prices, 20%? I know no new cars in Fla. The gerbment eeds to stay out f the free enterprise system. They are the problem.
You almost answered your own question Madhatter, as to why the State of Florida seems to demonstrate a compelling interest in controlling the retail cost of wind coverage – “Their customers will go someplace else once the price gets so high they cannot afford the coverage.” In this day and age that translates to jacking up the foreclosure rate even more from it’s currently giddy heights. I agree with the State – something needs to be done so Florida does not become a wasteland of overgrown, abandoned homes. You might want to take a good look around Louisiana at “overgrown, abandoned homes” and reconsider your views Madhatter.
The issue of forecloses is not State Farm’s concern. Their issue is of providing insurance coverage at a means that entitles them to a fair rate of return and the ability to pay future claims. They are not expected to subsidize homeowners in Florida, or any state that causes them to lose money on the product they sell. It appears they cannot make that fair rate of return, so they are choosing to leave. If you want to talk foreclosure issues, go to Tallahassee or Washington.
If they were not buying it from State Farm Mutual they would have to be buying it from someone else and the premiums would be high due to the risk.
The State of Florida wants to control the price of homeowners insurance due to 1 reason and 1 reason only. Politics. Crist believes this issue will help take him national and so far it appears to be working. He better hope he is long gone before the wind blows again down here. Once the people in Florida find out what he has burdened them with- there could be a mass exodus abandoning homes here anyway. Fortunately, most people feel like the State of Florida will end up in Washington asking for their own bailout.
Everyone needs to calm down and look at this issue with some good, old fashioned logic as opposed to emotion or what appears to be chic State Farm hatred.
Many posters accuse State Farm – both the Florida pup and the mutual parent – of being greedy and/or manipulative. This is done by accusing them of cooking the books and/or paying the parent mutual a handsome sum for reinsurance.
However, these accusations are being made in the midst of the company’s decision to leave the state while they are supposedly bilking Florida residents / policyholders in order to make this obscene profit.
Therefore, in addition to being greedy, I guess State Farm is also extremely stupid since they are walking away from a situation in which they are making an obscene profit.
Come on, people. State Farm is in business to make money. If they are truly making money, then they would stay in Florida. If they are truly making and too stupid to realize it, then the business they are walking away from will be there for the taking by remaining carriers chomping at the bit to increase marketshare and get in on the action.
This falls into the category of “be careful what you wish for.” The state has villified State Farm and even invited them, if I recall, to leave the state along with other carriers not with the Crist program. State officials should be overjoyed now that this insurance Lucifer, otherwise known as State Farm, has decided to spare Florida citizens of further unfair business practices.
Everyone might just be wishing for the good old days when State Farm was around, though, the next time the wind blows.
I think SF was hoping to call the state’s bluff.
Here’s my SF story, just to understand why some of us Florida SF customers are frustrated with SF:
I had a windstorm inspection done on my home. Sent it off to my SF agent. Few weeks go by and I get a call telling me that my insurance will go down $800 per year. Main discount was due to hip roof, new roof and year of construction (2000).
I was both happy and pissed. Why pissed? Well, when I purchased the home in 2001, SF sent out someone to inspect the house and take pictures… Which means, they knew my home’s construction details back in 2001?
My insurance for my home went from $650 per year to $2300 per year during that timeframe. To keep costs down I went from $250 deductible to $1000 and dropped personal coverage by 50%. Don’t forget the $4000 deductible for windstorm. No coverage for mould, sinkholes, and a bunch of other stuff.
So, what do I think of SF? Let’s say I have quote requests out for all my SF policies (home, boat, cars, RV and life)
and will be dropping them. Doesn’t matter if they stay or if they leave or if it costs more. I’ve had it with SF’s
BS.