State Farm: state withdrawal conditions illegal
Mar 9, 2009
Says state trying to keep it from leaving homeowners insurance market
By Brandon Larrabee
Florida Times-Union--March 7, 2009
TALLAHASSEE – Conditions set by regulators for State Farm Florida’s withdrawal from the state’s property insurance market are illegal and amount to a rejection of the request, the company said in a filing with the state late Friday.
State Farm’s petition seeks to overturn many of the strings attached to Insurance Commissioner Kevin McCarty’s order authorizing the withdrawal, including requirements that the company must work with the state to make sure its customers end up in the private market and must allow its agents to sell policies from other property insurers.
State Farm says McCarty’s order would illegally force the company to remain in the state by creating unpalatable requirements it would have to meet before leaving.
“The Conditions proposed by [McCarty’s office] would preclude the orderly and effective execution of the withdrawal plan, significantly enhance the risk to State Farm Florida’s policyholders and the public and are tantamount to prohibiting withdrawal,” the company’s filing said.
McCarty’s Office of Insurance Regulation has 15 days to consider the petition. Spokesman Ed Domansky said the office has no immediate comment on the filing.
“We will carefully review this petition,” Domansky said.
State Farm Florida, the state’s largest private property insurer, filed its request with his office in late January, two weeks after McCarty rejected a proposed rate increase that would have averaged 47.1 percent statewide.
The decision does not affect auto, life or health insurance lines offered by State Farm Mutual of Illinois, the property insurer’s parent company.
State Farm plans to cancel more than 1.2 million policies, including more than 700,000 homeowners policies, almost 80,000 condominium owners policies and almost 62,000 renters policies. Almost 58,000 boat owners would also be affected.
The company must give customers at least 180 days’ notice before it ends their policies.