Standoff ends: State Farm to remain in Fla.

TALLAHASSEE, Fla. – Dec. 16, 2009 – The Florida Office of Insurance Regulation today announced that State Farm Florida has agreed to continue serving the Florida property insurance market.

Insurance Commissioner Kevin McCarty issued a consent order that resolves pending litigation between State Farm Florida and the Office of Insurance Regulation over the company’s plan to abandon the state’s property insurance market. By the terms of the consent order, State Farm Florida will remain a significant player in the Florida residential property insurance marketplace.

“This agreement is the product of a long and arduous negotiation process,” says McCarty. “The final result is beneficial to the people of the State of Florida, and beneficial to the Florida insurance marketplace. The consent order satisfies the office’s requirements issued in our order dated Feb. 13, 2009, and allows State Farm Florida to remain a viable insurer in the Florida market.”

Under the terms of the consent order, State Farm Florida will drop no more than 125,000 policies. The insurer had 810,416 residential properties in Florida as of October 2009. Even after shedding the 125,000 policies, State Farm Florida should remain the largest private insurer of property in the Florida.

The consent order also grants State Farm a 14.8 percent rate increase for all homeowners’ and condominium unit owners’ policies. The Office of Insurance Regulation says the rate increase approval is based on information provided by State Farm.

The consent order concludes a series of events that began with Florida turning down a State Farm average rate hike request of 67.1 percent on Jan. 27, 2009. A few weeks later, State Farm announced that it would stop insuring property in the state. Recent news reports, however, indicated that the state, and to a lesser extent State Farm, had softened their stance on withdrawal.

“I would say this is a successful resolution of the problem,” McCarty says. “Having State Farm in Florida is better than no State Farm at all. That continues to be our position.”

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