State Farm, Florida agree to stay out of court until June
By Jeff Harrington, Times Staff Writer
Posted: May 12, 2009 04:28 PM
State Farm and Florida insurance regulators have called a cease-fire on going to court as they continue negotiating over how the giant insurer can conduct an orderly withdrawal from Florida’s property insurance market.
The two sides filed a joint motion with the state’s Division of Administrative Hearings to hold the case in abeyance until June 15 as talks continue.
"Until our talks break down, there’s no need for a hearing," State Farm spokesman Chris Neal said. "Both sides think having to go to court right now would be counterproductive."
State Farm, the biggest property insurer in Florida, signaled its plan to pull out of the state’s property insurance market in late January, citing rising losses and the risk of heavy hurricane claims. It intends to drop about 1.2 million policies over the next two years, 700,000 of them covering homeowners.
Florida Insurance Commissioner Kevin McCarty, however, has set conditions for withdrawal that State Farm is balking at. For one, he wants State Farm to give up its certification as an insurer, which the insurer said could hurt its access to buy reinsurance. McCarty also wants State Farm to allow its agents to sell other companies’ policies.
State regulators say one of their biggest issues is to steer discarded State Farm policies to other private insurers and avoid putting more high-risk policies into state-run Citizens Property Insurance. Citizens, the state’s insurer of last resort, is allowed to assess all insurance policyholders statewide if it cannot pay claims after a major storm.