State Farm’s Exit Remains In Limbo
By RUSSELL RAY
Published: March 27, 2009
State Farm’s plan to get out of the property insurance business in Florida is still on hold.
The insurance giant sought an appeal of the conditional withdrawal plan approved by the state’s Office of Insurance Regulation, but its request for a hearing was denied this week by the office.
"They simply did not provide adequate support to show that there were any real items in controversy," said OIR spokesman Ed Domansky. "The petition came across more as if they were expressing disappointment than anything really legal. They have to prove that there are, indeed, matters of material fact in dispute."
Until both sides reach an agreement, State Farm cannot implement its plan to drop 1.2 million policies, including 700,000 homeowners, in Florida.State Farm officials say they are hopeful an agreement can be reached with regulators and that an appeal hearing won’t be necessary. State regulators approved State Farm’s withdrawal plan with the condition that it let State Farm agents sell policies to other private insurers. Right now, State Farm agents only can sell policies for State Farm and Citizens Property Insurance Corp., the state’s insurer of last resort.
"That’s not something we’re willing to do because that’s in direct conflict with our business model," said State Farm spokesman Chris Neal. "It’s been a very successful business model."
However, without that provision, state-run Citizens, already bloated with 1.1 million policies, would get even bigger, Domansky said.
"If those agents are not allowed to write new business for companies other than State Farm and Citizens, that leaves Citizens as the only alternative," Domansky said. "That’s just not acceptable."
Reporter Russell Ray can be reached at (813) 259-7870.