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State Farm to Withdraw From Florida Property Market

On January 27, two weeks after Kevin McCarty, Florida's insurance commissioner, denied its request for a statewide rate increase of 47.1 percent on homeowners policies,...
February 3, 2009

On January 27, two weeks after Kevin McCarty, Florida's insurance commissioner, denied its request for a statewide rate increase of 47.1 percent on homeowners policies, State Farm Florida, a subsidiary of State Farm Mutual, announced plans to close down its property insurance operations in the state.  More than 1 million policyholders will be affected by decision, which comes at a time when Florida is facing one of the nation's highest foreclosure rates and rising unemployment. Florida's state-sponsored insurer of last resort is likely to have to extend coverage to many of State Farm's policyholders. 

State Farm, which, along with many other insurers, suffered large losses from eight hurricanes in 2004 and 2005, says that it has not been able to repay loans from its parent company to cover claims on the storms and that it continues to lose money on property operations in Florida. Jim Thompson, president of State Farm Florida, said that the company was reluctant to take the action but had to accept the realities of the Florida property insurance market. Florida Governor Charlie Crist expressed indifference to the withdrawal of State Farm Florida from the market, but State Senator Mike Fasano said that he would propose legislation that would retroactively limit the number of policies a company could drop in any year.

State Farm Plans to Leave Florida Residential Market (Bloomberg 1/27/09)

State Farm Pullout Might Prompt Legislation (Tampa Tribune 1/29/09)

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