State Farm shedding more policies

For homeowners Jean and Karen Perrod, who live near Coconut Grove, the health of the Florida insurance industry isn’t determined by company surpluses or ratings agencies. They learned all they needed to know from a letter they got several months ago.

It said they were part of a lottery.

Their prize? Getting to search for a new insurance company.

State Farm is dropping the Perrods, along with tens of thousands of Florida customers, some each week, through next August.

The company was allowed to shed policies and raise rates in exchange for not withdrawing from Florida completely. The insurer contended it couldn’t afford to do business in Florida anymore, despite several hurricane-free years. Claims have continued to roll in from Hurricane Wilma, five years after the storm. The claims outnumber those for Hurricane Charley and the latest figures available show State Farm has paid out $1.3 billion in claims for Wilma.

“And we’ve still got a ways to go,” company spokesman Chris Neal said, because some of the new claims opened this year have not yet been resolved, some claims have been reopened and others are in some stage of litigation.

And claims for other kinds of damage are on the rise.

“For a long time, I think people were afraid of turning in small claims,” Neal said. “They were afraid of State Farm and other companies nonrenewing them.”

That reluctance may be a thing of the past, he said. “They’re getting nonrenewed anyway.”

CANCELLATIONS MOUNT

In the second quarter of this year alone, insurers canceled about 44,000 insurance policies for homeowners in Broward, Miami-Dade and Monroe counties, Office of Insurance Regulation data show.

And the stability State Farm gained is contingent on not having another hurricane anytime soon. While Florida appears so far to have lucked out another year, the tropics were plenty active, and they are predicted to remain so for the near future.

“With some help getting our rates close to being actuarially sound and being able to manage our exposure, at least we’ve created a stable company,” Neal said.

The company will remain the state’s largest private home insurer, even after it cancels the 125,000 policies the state agreed to. But there’s no guarantee that there won’t be more cancellations. “That’s all based on the scenario of not having another hurricane,” Neal said.

The Perrods, who have been with State Farm since Hurricane Andrew, have never made an insurance claim and insure their cars with State Farm as well. They anticipate paying more for insurance at a time when they can least afford to.

“I’m a massage therapist,” he said. “People are taking aspirin now. They’re not calling me.”

To make their premiums more affordable in recent years, they raised their deductible to $10,000. But they still paid thousands.

“All those years, I’ve been giving them money. What’s the purpose of that? They can do whatever and nobody’s stopping them,” he said. Their policy expires Nov. 24.

OLDER ROOF AN ISSUE

One of the few choices they have for insurance is state-run Citizens. That means their home must pass a roof inspection, and Perrod said things aren’t looking good. The roof is more than 15 years old.

“We are both 60. Life should be easier — not a struggle,” said Perrod, a native of Switzerland. He sometimes jokes with family there when they ask about life in the States.

“Is it better in America? No,” he said. “Well, I can tell you some good news: The sun is shining.