More than 1 million Floridians losing 'good neighbor' - Fox29 WFLX TV, West Palm Beach, FL-news & weather

More than 1 million Floridians losing 'good neighbor'

Posted by Rachel Leigh email

TALLAHASSEE, FL (AP) - The ads for State Farm say "like a good neighbor, State Farm is there," but it may be a different story in Florida. The state's largest private insurer is pulling the plug on homeowners' policies.

UPDATE, WED 10:30 AM: The decision by State Farm Florida comes two weeks after state insurance regulators rejected the company's request to raise rates by more than 47 percent.

The decision means State Farm Florida will no longer renew policies; that's for its roughly 1.2 million customers in our state.

State Farm can't do anything before completing a regulatory review in 90 days and is prohibited, by law, from discontinuing any policy without a six month notice.

State Senator Dave Aaronberg worries many homeowners with State Farm will go to the state funded insurance.

Florida's largest insurer overall is the state-run Citizens Property Insurance Company which offers coverage in cases where private insurers won't write policies.

Checking back in on the State Farm Web site, the company says "This is not an action we wanted to take, but one we must take given the realities of the Florida property insurance market".

There is a state run Web site that can help you find other options. You can shop and compare insurance rates there. The Web site is: Shopandcomparerates.com

UPDATE, TUE 1:30 PM: State Farm Mutual Automobile Insurance Co., the largest home insurer in the U.S., plans to drop 1.2 million customers and withdraw from Florida's residential market after a request for a rate increase was denied by state regulators. The insurer cited risks from hurricanes and the rising costs of everyday claims from the state's homeowners in an e-mailed statement today. The surplus from State Farm's Florida unit fell by $201 million in the first three quarters of 2008, a period where no hurricanes hit the state.

More homeowners in the state are relying on insurers with fewer claims-paying reserves as the two largest U.S. residential insurers, State Farm and Allstate Corp., scaled back following record storm seasons in 2004 and 2005, Fitch Ratings said in a report last year.

"We regret the impact this will have on our customers, employees and agents," Bloomington, Illinois-based State Farm said today in an e-mailed statement. The insurer, owned by its policyholders, filed a plan with regulators to drop its home customers over a two-year span while continuing to offer car, health and life insurance.

Allstate last year reversed its four-year-old policy of not accepting new homeowners, saying in August that it would take on some new policyholders.

The state's insurance commissioner, Kevin McCarty, has 90 days to review State Farm's plan to ensure it complies with state law. If approved, the insurer must then provide 180 days notice before any policyholders can be "non-renewed," or denied a new policy when their current coverage expires.

"We will carefully review State Farm's intended plans to ensure that they are in compliance with Florida law, and we will explore all legal options as well," McCarty said in a separate statement.

Previously: State Farm Florida is pulling out of the homeowner insurance business in Florida, the company said Tuesday morning, in a surprise move that will leave more than 800,000 policyholders without coverage and will cause almost certain turmoil in the Florida insurance marketplace.

"Faced with steeply declining resources to cover future claims and expenses, State Farm Florida has little choice," said Jim Thompson, president, of State Farm Florida. ''This is not an action we wanted to take, but one we must take given the realities of the Florida property insurance market.

"We regret the impact this will have on our customers, employees and agents in Florida," he added.

Thompson said the plan requires regulatory review, and State Farm Florida will not begin dropping policies under the plan until that process is complete. Florida, however, has no law on the books that would prevent State Farm from leaving the state's homeowner insurance market.

State Farm Florida emphasized that it was submitting a two-year plan that seeks to limit disruptions for customers, and if approved, will allow them time to find coverage with other insurers.

State Farm is Florida's largest private homeowner insurer, second only to state-sponsored Citizens Property Insurance Co.

State Farm is also Florida largest automobile insurer with more than 3 million policies. The company says it will continue to offer auto coverage. However, a 2007 state law pushed by Gov. Charlie Crist prevents insurers from offering only auto policies if they offer both auto and homeowners in other states.

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