State Farm Says It Will Reconsider Florida Exit If Rates Deregulated

June 22, 2009

  • June 22, 2009 at 9:18 am
    maria says:
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    Sounds like a game of chicken. Christ and Mc Carty are in one car. State Farm Ceo in the other. Who wants to take bets?
    Who do you think will chicken out first.
    Deregulate one deregulate all. This still is the United States of America Isn’t it????????????????

  • June 22, 2009 at 5:02 am
    Kyle says:
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    Political Football at its best.

    “Willing” is nothing more than a smokescreen prior to Chuck signing before the June 27th deadline.

  • June 23, 2009 at 7:17 am
    tj says:
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    You do for one you do for all.

    Just get rid of McCarty and then you have deregulation.

  • June 23, 2009 at 7:59 am
    Fla. Agent says:
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    If you are going to deregulate one, then deregulate all – except for solvency!

    Will Christ sign an unconstitutional bill into law? He’ll probably let it become law without his signature.

    In the meantime if it does become law, State Farm, will jack up the rates in the south half and the panhandle, lower them in the center, and the law of adverse selection will drive the business into Citizens and we’ll ALL pay – for years to come.

  • June 23, 2009 at 8:03 am
    they are using our tax dollar says:
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    law right .. TELL STATE FARM TO GO TO HELL.

  • June 23, 2009 at 8:14 am
    who pays. we all do. says:
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    4. STATE FARM
    CEO: Edward B. Rust Jr. 2007 compensation $11.7 million

    HQ: Bloomington, IL

    Profits: $5.5 billion (2007)

    Assets: $181.4 billion70

    As the biggest property casualty insurance company in America, State Farm has become notorious for its deny and delay tactics. In many cases, the company has gone to extreme lengths to avoid paying claims, including forging signatures on earthquake waivers after the deadly Northridge earthquake, and altering engineering reports regarding damage after Hurricane Katrina.

    Hurricane Katrina showed State Farm at its worst. One of the deadliest natural disasters in U.S. history, Hurricane Katrina made landfall on August 29, 2005, near Buras, Louisiana. The storm killed nearly 1,600 people and caused $135 billion in damages.
    One of the legacies of the storm was the widespread dissatisfaction with the response of State Farm and other insurance companies. State Farm would later claim it had settled 99 percent of its cases, but regulators criticized the company for using misleading statistics. The company claimed that any house that had what they considered water damage did not constitute a claim in the first place. In fact, the Louisiana Department of Insurance reported that it was contacted by 9,000 consumers seeking help resolving disputes with their insurance companies.
    State Farm denied the claims of the Nguyen family of Mississippi, who lost their home in Hurricane Katrina. State Farm’s own engineers concluded that the damage was caused by wind and even cited eyewitnesses who saw another house picked up by the wind and thrown into the Nguyens’ home. State Farm, however, hired another engineering firm to come to a different conclusion and then denied the claim, saying the damage was caused by flooding. State Farm also denied the claims of Dean Barras in Louisiana. Barras’s home was exposed to the elements for two weeks, but State Farm’s response was “the chimney was not built properly.”
    Bob Kochran, CEO of an engineering firm assessing Katrina damage for State Farm, said that he was asked to alter reports with which the company did not agree. In order to keep the State Farm contract, Kochran agreed to tell his engineers to “re-evaluate each of our assignments.” One of the engineers, Randy Down, responded in an email, “I have a serious concern about the ethics of this whole matter. I really question the ethics of someone who wants to fire us simply because our conclusions don’t match theirs.” State Farm’s attempt to unduly influence the engineers was exposed during litigation in Jackson, Mississippi.77

    One such angry policyholder was United States Senator Trent Lott. Lott, who had long counted on insurance companies for support, became an industry critic after his beachfront house was destroyed by Hurricane Katrina and his subsequent claim was denied by State Farm. Lott eventually settled with State Farm, but went on to sponsor legislation requiring insurers to provide “plain English” summaries of what their policies did and did not cover. Hurricane Katrina had highlighted insurance company use of such things as anti-concurrent clauses, which led policyholders into believing they were covered from the risks of hurricanes, when in fact subsequent flooding might wipe out any chance of a claim being paid. “They don’t want you to know what you really have covered,” said Lott.78

    In April 2007, State Farm agreed to re-evaluate more than 3,000 Hurricane Katrina claims, and within a few months had paid nearly $30 million in additional settlements. 79When a grand jury later issued subpoenas probing new claims against State Farm, the company sued Mississippi Attorney General Jim Hood. Hood decried the lawsuit, saying the company’s agreement to reopen claims had never been intended as “blanket immunity” from future probes.80

    Like Allstate, State Farm used consulting giant McKinsey & Co. The McKinsey concept involves cutting spending on claims payments to boost profits. Agents steeped in the McKinsey way speak of the “three D’s”- deny the claim, delay the payment, and then do anything to defend against a lawsuit.

    In 1994, the Northridge earthquake in California killed 57 people, injured 9,000, and caused an estimated $33.8 billion in damage. It was the costliest earthquake in U.S. history, and insurance companies such as State Farm did everything they could to avoid having to pay for it. After it hit, a State Farm employee testified that company officials forged signatures on earthquake waivers to avoid paying quake-related claims and then withheld evidence when the company was sued. State Farm and other insurers accused of mishandling Northridge claims were fined over $3 billion in penalties; however, State Farm never actually paid the fines. Instead, an insurance department whistleblower would eventually reveal that the insurers donated $12 million to two non-profit foundations created by insurance commissioner Chuck Quackenbush in what amounted to little more than a bribe.81

    In 1999, a series of powerful tornadoes killed 44 people in Oklahoma and caused $1.8 billion in damages. Homeowners brought a class-action suit against State Farm, alleging the company had tried to undervalue damage to homes or claim damage was caused by other factors such as faulty construction. A jury eventually ruled that State Farm acted “recklessly” and “with malice” and disregarded its duty to policyholders. The firm that State Farm used to allegedly undervalue damage was Haag Engineering-the same firm that would be accused of mishandling Katrina claims six years later.82

    In 1999, despite Oklahoma tornado claims, State Farm earned $1.03 billion in profits after taxes.83 In 2005, despite Hurricane Katrina, State Farm turned a $3.24 billion profit. The following year, without a major catastrophe, profits increased to $5.32 billion, for which CEO Ed Rust received an 82 percent pay raise.84 In fact, since State Farm hired McKinsey, the company has seen profits more than double from its 1990s level to the $5.4 billion it made in 2007.

    Following the same tactic as Allstate, State Farm has embarked upon a campaign of market withdrawals and non-renewals in the aftermath of Katrina. State Farm has stopped writing new homeowners policies in Mississippi and Florida, and in the latter state non-renewed a further 75,000 policyholders.85 Just as they did in the aftermath of Katrina, State Farm stopped writing new homeowner policies.86

    While State Farm will do anything to fight a claim once it has been taken to court, the company has never been shy about using the courts to its own advantage, even when it has to first stack the deck. In the 2004 Illinois Supreme Court election, one justice-Lloyd Karmeier- received huge amounts from State Farm employees, lawyers, and groups to which the insurer belonged. Karmeier won the election and soon after cast a crucial vote reversing a $9 billion judgment against State Farm.87

  • June 23, 2009 at 8:45 am
    WCFL Agent says:
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    You can say read the bill all you want, what you have to read is between the lines. The primary carrier this is designed for is SF as most of the other carriers that fit this have been long gone and I have not gotten any indication this will make them come back. It is preferred treatment and unfair at its best and the same rules should be applied to all. If they can’t make it under the current rules like everyone else, then they need to make changes to clean up their problems or go ahead and leave. If anyone believes for one minute they will not manipulate their setting of rates to drive risks away, probably to citizens, and then underprice their competition who aren’t deregulated on risks they want, you are kidding yourself. What is good for one should be good for all, period.

  • June 23, 2009 at 8:53 am
    what a wast of money who pays says:
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    TO THE UNTOUCHABLES. Edward B. Rust, Jr., will be happy to tell you that he is the Chief Executive Officer of State Farm Mutual Insurance Company. He has deep family ties to State Farm, as his father and grand father have both served in that capacity. He will also tell you that he is an educated man who has been to law school and is a past practicing attorney. In addition, he was the chairman of the Coalition for Excellence in Education and a member of George W. Bush’s transition advisory team on education. So with all of that education why will he not deal with his company’s inbred greed. Does he not know that we are in the 21st century where anyone can look on the internet and see the billions of dollars that are being spent to protect their empire from the consumer? In Utah, the company was fine $25 million in punitive damages, in part for the “systematic destruction of documents and systematic manipulation of individual claim files to conceal claim mishandling”. An Idaho appeals court fined the company $9.5 million in punitive damages for making use of “a completely bogus” outside bill review company that helped lower the cost of medical bills. In October of 1999, an Illinois jury rendered a $456 million judgment against State Farm and an additional $730 million in punitive damages for the insurer’s breach of contract with auto policy holders by relying on generic replacement parts. Rust was adamant in his insistence that fraud had not been committed. A class action law suit in the name of State Farm policy holders was filed in 2003 for breach of contract and statutory consumer fraud in which $1.1 billion was awarded to plaintiffs. When a company is misleading the public, should that not be considered fraud? A consumer would go to prison for that type of behavior. State Farm will let you know that, in several states, fraud and abuse is pushing up the cost of auto insurance. A court in late 2001 reached an unfriendly consumer decision that could have the effect of reaching deep into the pockets of the consumer. Sharply higher jury awards in vehicular liability cases are putting additional upward pressure on auto insurance rates. The average jury award in auto liability cases rose from $187,000 to $269,000 in 2000, an increase of 44%. I question if any of the lawsuits would be necessary if the company would just fairly pay their claims. The company represents on their web-site that consumer protection is one of their most important goals, but do they really think that courts would be awarding multiple millions of dollars in bad faith claims if that were their emphasis? State Farm’s ratings are based on their financial strength. State Farm states that their high ratings are also based on strong claims paying ability. With this ability, why is it necessary for their policy holders to allege that the claims department was directed, in evaluating their cases, to take them to trial instead of settling within the limits of the policy? This practice exposed policyholders to judgments above the limits of their policies, when the company was attempting to make an effort to win smaller decisions. Two former in-house attorneys for State Farm contend that they were often called upon by the insurer to represent its’ policy holders and were forced to commit “unlawful and unethical activities, including requiring the two to stay silent about the rights of the policyholders”. State Farm seems to have reckless indifference for the truth for the purpose of corporate and personal economic gain. State Farm should know that continued scrutiny of their claims paying practices will continue especially with the advent of new claims that are surfacing from lawsuits revolving around Hurricane Katrina. A message to Mr. Rust, and any employee of the company that is acting in bad faith for its policy holders. Its time to stop no more.
    IT TIME FOR THE LAWS TO WORK FOR THE PEOPLE NOT STATE FARM.

  • June 23, 2009 at 9:11 am
    Fedup says:
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    What about the third largest company in Florida?

    UNIVERSAL PROPERTY ‘

    They are not b-i-t-c-h-i-n and whining like State Farm has been since January.

  • June 23, 2009 at 9:13 am
    >>>> says:
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    Where does one start to respond to this rambling. The one thing you did get right is we all do pay.

    Shame on State Farm and other carriers for fighting fraud and standing behind the contract they sell to their clients. Fraud is the largest variable effecting everyones rates. Trent Lott’s home was wiped off the slab and pushed into the bay behind him by a 30ft wall of water…Not wind…I personally handled over 1000 hurricane Charley claims and not one home disappeared from 140+ mph winds. Lott was promptly paid 350k under his NFIP policy but that wasn’t enough. He made a fool of himself publicly, and his famed attorney brother-in-law Dickie Scruggs is in jail for fraud… All of Lott’s federal investigations into Sf, Allstate etc. revealed nothing. Most if not all of the early judgments against the industry are being overturned everyday.

    As for the remainder of the disputed Katrina claims, less than 1% of the total files claims, those problems could all be avoided by mandating everyone carry flood insurance = to the value of their home. The fed’s put high value homes at risk by not offering higher limits of coverage. Not the ins industry. Why you ask, its too expensive for them to offer higher limits. So people take their chances and run without excess flood. They rolled the dice and lost.

    Policy contracts are all reviewed and approved OIR’s in each state. The problem is after the fact when insurance contracts don’t meet public expectations and people are living on the streets, someone has to pay. Deep pockets will always be targeted. This is way the big boys are leaving the high risk areas. Not worth the media attacks and neg public opinion when claim settlements don’t go in the consumers favor.

    Profits and salaries have nothing to do with the contracts the insurance industry offer. SF sits on 50+ billion in cash. At 5% interest every year, they should have profits in excess of 2.5 billion, without an underwriting profit, each and every year… Anything less than that is a bad year…

    The SF handles 36k claims every day… This doesn’t include cat losses. Do some fall through the cracks and people not get taken care of to everyone’s expectations..Sure…Is it right, no. Can it be avoided, sure. Day in and day out they do a better job than most. This is reflected in the fact that they have 50 million policyholders nationwide. This isn’t by accident.

    Back on point, people need the option in Florida to choose between multiple insurance options. If someone wants to factor into their decision making process your rambling, then let’s go ahead, pass the bill and see what happens.

  • June 23, 2009 at 9:17 am
    Justice says:
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    Fight heats up over bill to allow property insurers to raise rates on their own
    Governor urged to veto deregulation legislation
    By Julie Patel | South Florida Sun-Sentinel
    The fight is heating up against legislation that would allow large property insurers to raise rates without state approval.

    Eight consumer groups – including the Consumer Federation of the Southeast and the Florida Public Interest Research Group – have implored Gov. Charlie Crist to veto the bill passed by the Legislature earlier this month.

    “This amounts to another bailout – this time for major insurance companies as they attempt to cherry pick the market by pricing their way out of the areas they don’t want to serve,” said Consumer Federation Director Walter Dartland in a statement issued Wednesday.

    Crist has expressed concerns about the legislation. In the past two years, he supported laws that aimed to hold insurers accountable and lower home insurance rates. Such rates had skyrocketed after the hurricane seasons of 2004 and 2005.

    “To have that industry unregulated in essence is not something that is appealing to me, nor is it fair to the customer,” Crist said Wednesday.

    Crist, who this month announced plans to run for a U.S. Senate seat, also has yet to make a decision about whether to sign a broad property insurance measure. That legislation would allow Citizens Property Insurance to increase policyholder premiums by as much as 10 percent a year and speed the process for private insurers to pass certain backup coverage costs to consumers.

    Consumer groups are divided on it; some say it’s needed to reduce financial risks for all Floridians if a major hurricane strikes. Others say the recession is the wrong time to increase rates.

    Proponents of the deregulation bill say it would help attract large insurers that dropped policies in Florida in recent years. Rep. Bill Proctor, R-St. Augustine, said the bill would give consumers the option of paying more for coverage from a larger, more experienced insurer.

    State Farm announced earlier this year that it plans to leave Florida’s property insurance market. Regulators and an administrative law judge had rejected its request to increase rates by as much as 67 percent.

    About 120 companies could sell unregulated policies under the bill, according to the Office of Insurance Regulation. The office still could reject rates if they are calculated illegally.

    Opponents, including many Florida-based insurers, say the deregulation bill would punish companies that filled the gap when major insurers starting shedding policies.

    “We need more smaller insurers competing, not fewer large insurers who dominate and can basically hold us hostage and charge any rate they want,” said Brad Ashwell, a legislative advocate with Florida Public Interest Research Group.

    Consumer groups opposed to the bill include the Florida Consumer Action Network, Consumer Watchdog, the Center for Economic Justice, United Policyholders, Insured’s Public Action Coalition and Floridians In Action.

    Florida residents interested in weighing in on the legislation can write to Crist’s office at Charlie.Crist@myflorida.com or call his office at (850) 488-4441. OR FAX.

    Julie Patel can be contacted at jpatel@SunSentinel.com and 954-356-4667.

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  • June 23, 2009 at 9:26 am
    Robert says:
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    Go get yourself a policy and let to go..

    I fail to understand everyone trash talking SF. They aren’t complaining. They made the business decision to leave. Their agents and 2/3’s of the legislature are disappointed because hundreds of thousands of SF customers what the option to see what their rate would be if the co stayed. If your not with SF, you don’t have a dog in this hunt. Unless your an independent agent looking for some easy business to pickup when they leave.

  • June 23, 2009 at 9:26 am
    67 percent. says:
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    Regulators and an administrative law judge had rejected its request to increase rates by as much as 67 percent.
    67 percent. HOLY CRAP.
    MAY IF THEY WOULD JUST BE FAIR.

  • June 23, 2009 at 9:31 am
    .... says:
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    If you read their rate filing last summer, they submitted documentation supporting a 67% rate increase but for some reason, only asked for 47%. With the OIR foolishly denied the increase they modified their request prior to the administrative hearing and went for it all. What did they have to loose, it was going to get denied anyway. They probably had to modify their request in preparation of a lawsuit against the state.

  • June 23, 2009 at 9:33 am
    Jo says:
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    I agree, sounds like people are now upset they might stay.

  • June 23, 2009 at 9:37 am
    million in punitive damages says:
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    fine $25 million in punitive damages.$9.5 million in punitive damages .456 million judgment against State Farm and an additional $730 million in punitive damages for the insurer’s breach of contract . FINE AFTER FINE THE CONSUMER IS THE ONE WHO PAYS FOR ALL OF THIS WE KNOW THAT STATE FARM IS IN HUGE TROUBLE IN TEXAS WHO WILL PAY FOR THAT YOU AND ME.

  • June 23, 2009 at 10:03 am
    MH says:
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    My husband and I have been insured by State Farm since we were married years ago. I have never been insured by any other company for home or auto and he hasn’t either. I don’t know anything about the ratings (though I suspect I’ll have to learn soon) but I do know that I’m disappointed in State Farm’s choices. When State Farm ends our homeowners coverage, we’ll also be moving our auto and life insurance policies to other companies. I was at a birthday party last weekend and the State Farm subject came up in conversation. I was surprised to hear that all of the other couples also plan to cancel their auto policies. I hope State Farm is prepared for a mass exodus. Oh well, their handling of claims is not what it used to be anyway.

  • June 23, 2009 at 10:42 am
    Robert says:
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    State Farm leaves Florida people are headed to Citizens, especially those in older homes along the coast. They stay, possibly offer a product most people can’t afford and they are still headed to Citizens or maybe a takeout carrier. Once capacity issues kick in for the domestics, many of the inland people will be off to Citizens too. What’s the issues here??? Are you worried about having to compete against the best P&C carrier in the industry??

    State Farm has made it crystal clear they want to charge a premium = to the risk. They have the market share, they don’t want more. Your fears of them running your takeouts companies out of business are unfounded. The bill still requires the OIR to make sure the companies are not undercutting the market. SF isn’t going to drive companies out of business by under cutting the market along the coast or inland. Even if they were stuipd enough do do it and could get away with it, they still can honor the promise made by the policy. Can’t say the same for those carriers you represent at any price.

  • June 23, 2009 at 10:53 am
    BIG AL says:
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    ISN’T IT AMAZING HOW STATE FARM’S HOMEOWNERS CUSTOMERS HAVEN’T JUMPED SHIP IN HUGE NUMBERS.

    STATE FARM GIVES DOUBLE WIND CREDITS!!!!!

    20% CLAIM FREE DISCOUNT
    20% EXTRA BUILDING REPLACEMENT

    2007 273000 CBS HOMEOWNERS POLICY,NO FIRE HYDRANT, HIP ROOF, 1000 DED W/ 2%HURRICANE, LEE CTY
    1100 PER YEAR
    935 W/ CLAIM FREE 20%
    MORE OFF WITH WIND MIT

    NOT TO MENTION THE LARGEST CLAIMS FORCE IN THE COUNTRY IF THERE’S A DISASTER & THE AMAZING ABILITY TO WRITE CHECKS

    STATE FARM HANDLED BOTH OF THE HURRICANE YEARS 04 & 05 WITH LESS THAN 1% COMPLAINTS

    STATE FARM IS NOT A CHARITY!
    FULLFILLING YOUR PROMISE IS ALL THAT MATTERS,
    LOOK AROUND ANY LARGE COMPANIES LEFT?

  • June 23, 2009 at 12:16 pm
    Erie Eddy says:
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    Get real people! The numerous “takeout” companies that can barely keep the same Demotech rating from year to year would not be allowed to operate in 48 other states (except Louisiana) because of lack of surplus and inability to purchase “real” reinsurance.
    One set of rules have been contrived to create the “appearance” of a market to the consumer/voter. Perhaps deregulation of rates for “real” insurance companies would increase market capacity thus eventually creating competition amongst a handful or two of the big boys that would ultimately help all Florida residents by reducing the potential size of assessments when the next big one hits.

  • June 23, 2009 at 12:27 pm
    Crystal Ball says:
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    Spoken like a true State Farm agent!

  • June 23, 2009 at 12:33 pm
    BEN DOVER says:
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    They should not be able to write Citizens if carriers are willing to write.It should also bring back the last resort rule.
    State Farm agents are lazy for the most part and the insureds are the bait for the 17% multiline discount on the overpriced auto insurance.

  • June 23, 2009 at 12:46 pm
    cotyre says:
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    SF has been building towards this for years. Why do you think the segmented the Florida property operation- so they could claim how much money they were losing- and charge higher rates. I will read the bill- if you will read the SF exit plan. Talk about a company with issues- 1.21 expenses to every 1 premium dollar. Sounds like SF should have been underwriting and re-underwriting their book of business in Florida instead of patting themselves on their backs for years.

  • June 23, 2009 at 12:52 pm
    Bill says:
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    I think this is great it allows carriers with substantial financial resources to charge what ever they want. IF YOU DONT LIKE IT CANCEL YOUR COVERAGE AND WRITE IT WITH MUTUAL OF OH MY GOD.

    YOUR CHOICE.

  • June 23, 2009 at 1:03 am
    John says:
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    Why is it ok for the insurance commissioner to approve rates for a domestic carrier higher than my State Farm policy if the current system is so fair. I have been asking that question on these blogs for a while now but no one answers that. I liked the one comment that if State Farm can’t make it on the same field as these other carriers they should just leave.

    With the rate comparisons I have gotten it seems like State Farm has been told to accept a much lower rate than most of the domestics while the domestics are allowed these higher rates. Is this the level playing field they are talking about. Seems like fair to them is running State Farm out so they can write all the inland business. No wonder the domestics are aginst this bill State Farm would still be lower priced even with their rate increases than the domestics with regulated rates where I live.

    They complain that State Farm and the other large carriers will cherry pick inland risk. If it is a level field why are the domestics only writing inland risk. They may have taken policies out of Citizens in the high risk area but they are not writing new business in those areas. The insurance commissioner is worried that the domestics will not take all of State Farm’s business based on what he has said. Sounds like the domestics are not willing to take the risk State Farm has on the books but at the same time the state won’t approve rates. What is really going on here?

    I don’t understand why I should have to pay two or three times more to go to a company I have no trust in or have ever heard of to purchase my insurance. Sounds like the Domestic carriers are just as greedy as they claim the large companies are. The problem is the insurance industry has forgotten about the customer all together and so have many of you. This blog asks if this is still America, deregulate one deregulate all. I say if one company can charge a rate all should be allowed in the same market.

    If I can choose to buy insurance from who I want when this bill is signed I’m for it and I want the governor to sign it. I saw the difference between companies after Andrew and I as an American should have the right to pay more and get the company I want. Deregulation would be nice for all but I don’t have time to wait for that dream if I want to keep my State Farm policy.

    I pray all of you get deregulated at some point because it is obvious that regulation of rates is not working. I do think regulation should still exist regarding solvency and fair customer service.

  • June 23, 2009 at 1:27 am
    WCFL Agent says:
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    It is just too simple for you to accept, what is good for one should be good for all. The size requirement is a joke because SF got to this stage on their own playing by the same rules all others play by. I do represent some of the new domestics as well as regional & national one which has ratings (A++) that puts SF to shame. I have no problem competing with SF or any other carrier, the best surprise for many former SF customers was the auto where we saved them $100’s and in one instance over $1200 a year with the A++ carrier. We got no special treatment when national carriers either cut back or left completely on the homeowners. SF maybe should look at their expense ratios and work on that instead of looking for special treatment. I consider SF good competition and have a good relationship with them. I just think whether it is them or any other company that deregulation for all is what is fair for all as well as the consumer. Last comment, I think it is interesting to hear yours and other comments regarding the new domestics, yet SF agents are forming their seperate agencies and running to these same carriers quicker than you can say “what bad rating”!

  • June 23, 2009 at 1:30 am
    Puzzled says:
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    I don’t understand why if the bill is signed, that not all carriers, national and domestic would be subject to it? SF can choose deregulation and the domestics must submit to regulation?

    Is this b/c SF is a national carrier and the domestics are Florida only?

  • June 23, 2009 at 1:50 am
    Cam says:
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    No, insurance and rates are all regulated by the state. They determine the method by which they are regulating companies and to what extent. I haven’t read the bill, but i would imagine they are establishing a capitization rate or a net written premium standard by which they determine who would be regulated. By not regulating large companies, and regulating smaller ones, they are putting smaller ones at a competitive disadvantage and an uneven playing field. If they are going to allow a free market, truly make it a free market.

  • June 23, 2009 at 2:00 am
    SF ROCKS says:
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    Way to go AMAZING!! You hit the nail on
    the head. Christ and his gov’t buddies thought all of SF’s customers were going to jump ship but they didn’t!! They did go looking for other insurance but STILL found SF to be cheaper than most. Why waste your time with a no name company when you can have the backing power of one of the BEST companies in this country!! State Farm has been around a lot longer than most and they have 98% customer satisfaction!!!They are always quick to pay claims and put the customer 1st!! If SF leaves FL it will damage a lot of lives. So many people will lose their job in the already jobless market! I hope Christ signs the bill and shows he does have a backbone to admit when he is wrong!!!

  • June 23, 2009 at 2:01 am
    J-Dog says:
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    I wonder if you borrowed money under the capital build up program you may have to have regualted rates? I’m assuming that money is our tax dollars right? So since it’s subsidized maybe it should be regulated?

    If you bring in your own capital – looks like at least $150M or more – you don’t have a regulated rate??

  • June 23, 2009 at 2:06 am
    Cam says:
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    That was the original deal. If you took their re-insurance for catastrophes from the state at a discounted rate, you essentially because their puppet on rates. It was the legislators intent to “pass on the savings” from the discounted re-insurance acquired by insurers, to their customers. The state argues that SF never done that, so they feel the need to over regulate to make sure it happens. However, much of the difference in the rates they disagree on still is caused by the method and years spread of catastrophe modeling. There is no set model required for that, and everyone does it differently.

  • June 23, 2009 at 2:15 am
    Left around to the Right says:
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    With all the bad mouthing of SF going on, you’d think the industry offered no other choices! In fact, IJ comments have touted the many options available in FL. If this is a free market and SF prices themselves out of the market, what’s to lose? That’s the beauty of this system….SF too high, move your coverage elsewhere…..unless ‘elsewhere’ is out of business because of inadequate surplus at the time of loss. But what the heck, the gov knows how to balance the books and run the state profitable….right?

  • June 23, 2009 at 3:31 am
    WK says:
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    All I have to do is google State Farm and the word “fined” and it would seem that State Farm pays a lot for doing things wrong.120 million for not giving wind mitigation credits is a large one. 98% claims satisfaction? Is that a countrywide average? After seeing how they managed claims from Katrina I really doubt it. I guess the holier than thou attitude I see coming from State Farm employees got to me. On a happier note I hope the company does stay in Florida. I will continue to write business either way. I also know two State Farm agents who have opened independent agencies to sell for these companies they say are unsound or should I say their wives and/or sister/brother opened the brand new agency right next door.

  • June 23, 2009 at 3:34 am
    MonarC says:
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    Are you kidding me? One Major Hurricane and Gov. Crist is begging Obama to give him and the State of FL a Bailout Package. He is charging people not enough for the coverage they have on their properties.

    What people don’t know is that He has set up Citizens to have a 10% Premium bump every year for the next 3 years. to help fix his problem… Good luck.

    SF is just the last Major Company to pull out.

  • June 23, 2009 at 3:53 am
    Jo says:
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    The fine was a million after the issue was self reported to the OIR.
    The insurance commissoner didn’t find the error on his end SF did but he still fined them. The credits owed my have been 120 Mill don’t know that but the fine was not.

  • June 23, 2009 at 4:04 am
    Robert says:
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    State Farm didn’t push for this legislation. Agents and the legislature started this drive toward rate deregulation. Even if the bill gets signed, SF will still likely cancel everyone in the Fl company. I doubt SF or any nat carrier will take seriously this bill even if its signed into law. The leg could change course next year and close it back down. The national carriers probably won’t really be back in Florida until Obama sets up national regulation and allows federal charters. Then and only then will nat carriers be free of the politicial winds that blow differently in each state. Maybe then you will have back carriers you lost years ago.

    The reason why independents don’t seem to get “special treatment” is none of you can agree on what should or shouldn’t be done collectively as a group. You loose a carrier and you either sign up with someone else or you loose the business to SF, Allstate, Etc. That’s been the name of the game for almost 2 decades. I watched an independent loose most of his commerical accounts to SF after Charley because Zurich pulled out and there was no market. Tough pill to swallow..

    Everyone can read between the lines and draw their own conclusions as to how this bill might benefit or hurt them. Ultimately the intention of this legislation is to allow the consumers options. Hopefully a few carriers who you represented years ago might step back in. That’s all. There are no hidden agendas or plans to run companies out of business.

    Everyone can give examples of people saving tons of money by switching from one carrier to another. Esp in auto ins. As it pertains to prop cov in Fl, financial solvency should play more of a role than $$. Most people are willing to pay more for the security provided by a nat carrier. We could sit here and pick apart every company. Bottom line is they have the capital. The State of Florida and all the domestics combined don’t…

    How would you feel if your largest “A” rated carrier decided to partner up with State Farm to offer exclusive P&C products to SF clients through a keepout program and you lost your appointment??? That’s a serious possibility as several carriers have expressed that very interest. SF will keep and service the bus if they choose to do so. No one, not even Crist can stop that from happening.

    Perosnally, I’ve got no problem with the domestics. The problem I have as a consumer is the state has politicially forced down them down our throats. The regulatory enviroment in Florida continues to reduce my options. What’s the difference between Federated Naitonal, Magnolia, Avatar, Sunshine State, etc.. NOTHING.. If I’m with one of these carriers there is no market for me to change. They all offer the exact same ISO policy, use the same independent adjusters who have no authority to do anything, don’t pay claims promptly and offer premiums just under the Citizens rate so they stay in business. NO COMPETITON…This is what they want. They don’t want SF here any longer. This ultimately isn’t good for the consumers of Florida.

    As for agents opening independent to sell this crap..I agree with you.. My prediction is most will be out of business before too long.

  • June 23, 2009 at 4:31 am
    JB says:
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    When did State Farm of Florida become an A Rated carrier?? I thought AM Best h=jsut downgraded them even further. I think my home insurance carrier (ASI) which is domestic and charges me 50% less is higher rated by them, right?

  • June 23, 2009 at 4:45 am
    Robert says:
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    SF was in fact downgraded last week by AM Best. I think the timing of this has something to do with the pending leg. AM Best also downgraded Argus to a “D” and Demotech still has them with an “A” rating. AM Best also provided “A” ratings for AIG investments before they collapsed.. What does it really mean.

    As for ASI, they are one of a small handfull of domestic carriers that maintain an AM Best rating. The reality is they are at or near capacity and could never take the place of a national carrier in this market. As for 50% less, apples to apples, I doubt it…

  • June 23, 2009 at 6:11 am
    Alex says:
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    Of course this bill will get signed. As much as Charlie will hate to do it, he knows he can’t lose State Farm or any of the other big carriers in the state or the whole market will collapse. But not to fear, once State Farm starts charging what they really want to charge, their customers will use the new ‘free-market’ economy to go elsewhere.

  • June 23, 2009 at 6:21 am
    Fact says:
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    WCFL – you state it’s preferred treatment and unfair and same rules should apply (I agree on the same rules part). But from what I’ve read the same rules do NOT apply to the FL only domestics that are part of the capital build up program – they are using our tax dollars – right? And if they take policies from Citizens – don’t they get a monetary incentive too?

    So it’s fair to use our tax dollars for insurers who compete against national carrier that are not subsidized? Did I miss something?

  • June 23, 2009 at 6:30 am
    Fact says:
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    Read the bill people:

    The bill states companies must have $500 M in surplus – this is good for Florida. They cannot purchase the upper layer of reinsurance from the CAT Fund – another good thing for Florida and the already under funded CAT Fund. It also states if they have between 150M and 500M they must maintain a net written premium to surplus is no more than two to one – another good thing to protect solvency. Plus, according to the OIR, there are 323 insurers currently licensed by the OIR to write personal lines residential property insurance that maintain $500 million or more in surplus or that maintain over $150 million but less than $500 million in surplus with a two to one ratio of net written premium to surplus.

    Straight from the bill, please tell me how that is unregulated? Please tell me how those capital and surplus requirements hurts us? Sounds like a good plan to require companies to have that surplus so they don’t go insolvent.

    323 does NOT sound like a select few to me….sounds like we need this bill.

  • June 24, 2009 at 9:07 am
    All SF Fault? says:
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    You probably blame SF for this too right?

    “Powerful plaintiffs attorney Richard “Dickie” Scruggs and a co-defendant pleaded guilty Friday to conspiring to bribe a judge for a favorable ruling in a case involving legal fees from a post-Hurricane Katrina lawsuit.”

    If you can’t beat ’em, bribe ’em!!!

  • June 24, 2009 at 9:35 am
    W2UY3 says:
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    Penny wise, Pound foolish…

  • June 24, 2009 at 9:38 am
    JB says:
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    You’re right .. its not Apples-to-Apples … My SF policy excluded coverage for mold and my ASI policy does not ….

    I do have one question … if State Farm Agents and company reps are soooo concerned with the claims paying ability of the domestic carriers (though some higher rated than SF of FL) then why everytime SF staops writing including NOW their agents start placing policyholders with Citizens?? Isn’t Citizens the worst run company with NO monay to pay claims? Maybe if you TRUELY cared about the policyholders you would recommend they contact an independent agent that could write them with an AM BEst rated carrier??

  • June 24, 2009 at 9:39 am
    pockets of the consumer 62% says:
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    In past court cases, judges have chastised and even fined State Farm for withholding records the company was ordered to produce. Evidence the company destroyed documents has been presented in several cases.

    In the Oklahoma case, after State Farm finally turned over to the court a “claims legal research” DVD and other records, Judge Richard G. Van Dyck told company attorneys

    “As I was watching these tapes I just want to say this for the record, the hair on the back of my neck did — did stand up because I was seeing things there that early on in this case I was told by (State Farm) defense counsel didn’t exist and couldn’t be produced. So I’m not real happy with that and I want to remind all counsel that their ethical responsibilities as attorneys outweigh the wishes of their clients.”

    Gary T. Fye, an expert in the analysis of disputed insurance claims who lives in Nevada, often testifies in insurance cases. Fye, who said he has testified on behalf of policyholders and insurance companies, has provided the courts information on State Farm’s history of destroying and withholding records.
    reaching deep into the pockets of the consumer

  • June 24, 2009 at 9:52 am
    Agree says:
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    100% agree, the SF agents are known to bash the other companies when being replaced. The only reason they place with Citizens is because it is easy to manipulate the customer into thinking the auto discount is still there.

    Just recently they also filed for an auto insurance rate increase, which can easily be explained but the homeowners situation is a question of overexposure and the stupidity to keep on writing in coastal areas.

  • June 24, 2009 at 10:23 am
    WCFL Agent says:
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    I guess my final comment and on this subject is this, SF and any other carrier could have been addressing their status in the state for some time, do you remember Andrew? No one held a gun to their head making them write all of this property exposure. They could have already taken more dramatic steps to reduce that exposure, reduce their expense ratio etc. and used all other means to correct their downward spiral. In the case of this bill, it still appears to me to be a case of special treamtment because they are the largest and are using all of this to make a bad situation worse and try to trash everyone else for a problem they created for themselves. Either stay in and deal with it making tough choices or promote a deregulation bill for the industry as a whole. I still say a poorly run large company is as bad as a poorly run small company, biggest is not always best.

  • June 24, 2009 at 12:13 pm
    Fact says:
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    Those are all valid points. But no one in Tallahassee is ready to deregulate the entire industry. If so, there should be no capital build up programs using our tax dollars for Florida start ups, Citizens needs to charge actuarial sounds rates, no assessments should be made to the private sector for Citizens being underfunded, no assessments should be made to the private sector b/c the CAT fund is selling reinsurance too cheap, etc, etc.

    Until then, why not let companies that have at least 150M or more of their own private capital (per the bill) and no tax payers dollars on line charge what they want. How does this hurt us as consumers?

  • June 24, 2009 at 12:28 pm
    Bob says:
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    Why $150 million? Why not $100 million? Why not $50 million? Why not $1 billion? Where did that number come from?

    Also, I did receive a call from my mother when the announcement was new and she was scared to death. It seems her agent told her not to bother shopping as there are “no other A rated companies in Florida and the other State companies would all go bankrupt if there were a hurricane.” Obviously, this is not true but here is my point ….. What happens to all of the blue hairs that don’t know any better and truely think that the scare tactics their SF agent are using is true? I can tell you my mom who is on a fized income would probably bypass her medication to afford the 50%-60% rate hike that SF will hit her with. Everyone says give the consumer the choice. I partly agree but that only works when the consumer is well informed and is told the truth.

  • June 24, 2009 at 12:42 pm
    Fact says:
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    Who knows where the 150M came from? The lower the better as far as I’m concerned – more companies would be free from price control.

    I do know it’s not fair to label all SF agents or all independant agents as not giving the whole truth. I tried to shop my policy with an independent and they said I should go with Citizens. Called another and got a lot beter advice.

    Like anything else, attorneys, ins agents, politicians, there are good ones and bad ones.

    But in the meantime, until we see a better overall fix to the industry, I see more positive in the bill then negaitive for us as consumers.

  • June 24, 2009 at 12:58 pm
    DS says:
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    I will answer your questions.
    1) When Citizens goes under, like after 2005 storms, the can asses all the other carriers in the state and then still pay claims. They are the only carrier that can do that. To your comments that they have no money is false, they have tons of money because all the policyholders in the state, regardless of carriers, are on the hook when they go bankrupt. All the others junky insurance carriers, like Poe just go under and you are left with a blue tarp for a roof. That is why Crist can force them to lower their rates and compete with private carriers because they can just get bailed out.
    2) Some of the domestics might have a higher rating then State Farm Florida, but there is no backing there, they do not have the parent company as reinsurance, like in the case with State Farm. A number of these domestics have backing through the “Insurance Capital Build-Up Incentive Program, the state pension fund. I would hate to be a State employee and learn that my pension is being used to fund these carriers. (http://www.sbafla.com/fsb/Home/InsuranceCapitalBuildUpIncentiveProgram/tabid/413/Default.aspx)
    3) And all the Independent Agents in Florida don’t write for any AM Best rated carriers, as there are none in the state. Demotech who charges a fee to rate, rate all these little carriers and their rating is in question.

  • June 24, 2009 at 1:16 am
    Bob says:
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    I’m not sure your #3 is accurate … when I moved my home policy from State Farm I asked for ONLY AM Best rated carriers. I was offered quotes from ASI, Tower Hill, Bankers, Florida Family and a couple of others. I remember him even saying that ASI and Florida Family were higher rated by AM Best than State Farm of Florida.

  • June 24, 2009 at 1:37 am
    DS says:
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    To clarify, there are carriers in Florida that are AM Best Rated, A-, B++, B, etc. But none that are A or above that are still writing. That is key. When I shopped my State Farm policy, I found when I compared coverage to coverage, everyone was more expensive. Also, having lived through hurricane damage myself, I sure as hell was not going to go with a carrier I’ve never heard of. Sure you might find it cheaper, but with a lot less coveage, no full sinkhole, replacement, loss of use, dog bites, etc. I am sticking with SF until I get the official word as nothing is for sure at this point. The parent company of State Farm Florida, State Farm Mutual Auto is A++. The media is doing is usual miss facts and understating the complexity of the issues.

  • June 24, 2009 at 1:44 am
    Bob says:
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    But my A- rated company is still higher rated than State Farm of Florida, right??

    Also, I did hear that on the older homes State Farm’s rates are very competitive but on the newer ones (mine was built in 2003) they are not. I can assure you I compared all of my coverages. I lost a little on the Loss of Use (State Farm is Unlimited) and gained Mold coverage. I personally saved 38%. Oh yeah … with ASI that A- rated company.

  • June 24, 2009 at 1:58 am
    ds says:
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    Yes, ASI is A-, & SF Florida is B, but with A++ parent behind them. So yes, it is all in how you look at it. Also, on the rates, I think age of homes, location, roof type, etc can alter the rates. For me, the question is, when the next big one hits, is ASI going to send thousands of claims reps with mobile claim centers down to you to issues you claims checks? Who handles their claims? How long will it take? I have been screwed before going with a cheaper, sounds too good to be true deal, when it comes to my house, I didn’t buy a cheap house, I am not going to buy cheap insurance.

  • June 24, 2009 at 2:38 am
    nobody important says:
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    Absolutely true DS. I had one individual from a large company once tell me that they didn’t sell insurance, they sold claim service. You can have any price you want, but if the company doesn’t settle claims fairly and promptly you have paid for a really expensive piece of paper. Large companies have catastrophe teams. How about all the Fl only companies? Gee, you get what you pay for.

  • June 24, 2009 at 2:39 am
    JO says:
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    He vetoed the bill 6/24/09 let the wind blow.

  • June 24, 2009 at 2:43 am
    Jim says:
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    Where did you see that?

  • June 24, 2009 at 2:46 am
    Jo says:
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    Gov. Web
    He states the cherry pick reason for his decision. Now the companies left can cherry pick instead. VETO Crist for Senate.

  • June 24, 2009 at 2:51 am
    DS says:
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    Yep, I saw that, we are all screwed. He had pressure from the Fl Chamber of Commerece, Disney, etc to allow the bill to become law. He just pissed off all the rich and powerful. He is done as a politician. RINO!

  • June 24, 2009 at 2:57 am
    Jim says:
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    Can’t the House overide the Veto with a 2/3 majority?

  • June 24, 2009 at 3:05 am
    ds says:
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    They can, but will they? Crist is an empty suit? But for some reason is really liked. So, I don’t know. I am telling you guys, this is very very bad news. This send a very bad message to any business wanting to come to Florida.

  • June 25, 2009 at 1:54 am
    WK says:
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    Some of your comments are just plain wrong and misleading. Many insurers in Florida are reinsured with “A” rated companies such as Lloyds, Swiss Re, Axa. Also you state no AM Best rated companies in Florida but then change your story when you see there are and then say they don’t have financial backing. I would say being reinsured where 50 cents of every dollar the company brings in goes to Lloyds or other companies shows backing and an ability to access money to pay claims. Also, many large companies still have policies in Florida and have teams in place for claims. Some have non renewed years ago but some still keep policy holders in Florida. Just because State Farm is a large company does not make them a good company and they have had plenty of trouble for mishandling claims. No company is perfect and all of them have their good and bad points but please stop trying to make everyone here believe that State Farm is the only company to be insured with. Your bias is obvious and it gets old. I personally think you work for the company and are not just the policy holder you try to make yourself sound like. State Farm always tries to bully their way into getting what they want. I don’t feel bad for the company at all. If they want to make more profits why not start at the top and cut off their overpaid executives. State Farm of Florida buys reinsurance from State Farm Mutual. So, while State Farm of Florida needs more money the parent company is doing just fine. Think about that. State Farm buys from State Farm then says they need more money or they leave. Another bully move.

  • June 26, 2009 at 1:50 am
    Only the big pocket donors are says:
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    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 charge at the time

  • June 26, 2009 at 1:51 am
    THE CONUSUMER says:
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    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 fight STATE FARM.. CONGRESS NEED TO WORK FOR THE CONUSUMER… NOT THE INS AGENCY.

  • June 29, 2009 at 3:43 am
    nobody important says:
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    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 Florida to play the game of who can be the most popular politician. You State Farm haters are such single minded morons. Get an education and learn a little bit about the insurance mechanism. It’s broken in Florida. If it wasn’t why have so many “greedy” top flight insurance companies already vacated the windy state?



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