State Farm Gets Approval To Cut Homeowner Discounts
By MARK E. RUQUET
Florida’s department of insurance has approved State Farm’s request to eliminate some discount programs to homeowners that a company spokesman said would have minimal impact on the company’s earnings.
The Office of Insurance Regulation today issued an order approving State Farm Florida’s request to eliminate four rating plans while rejecting two others.
The plans would eliminate the Claim Free Discount, Claim Record Rating Plan, Home Alert Protection and Home/Auto. The carrier will not be allowed to discontinue its Utilities Rating Plan (which rates based on the quality fire protection provided to property owners) and Building Code Effectiveness Rating Plan (which rates building code enforcement and standards in a district), but the department is allowing the company to make revisions to the plans.
Chris Neal, a spokesman for State Farm said State Farm Florida, the Florida property insurance company for the Bloomington, Ill.-based mutual company, said the changes would have minimal effect on the company’s bottom line, estimated by the department to amount to more than 28 percent increase in rate the company receives, according to the department.
“We are struggling with financial deterioration in our business,” said Mr. Neal. “These changes help slow the deterioration of our financial position, but it does not stop the need to withdraw from the property market.”
State Farm is withdrawing from the Florida insurance market, based on its calculation that it can’t make a profit because of hurricane losses, but a plan for withdrawal has yet to be approved by the department. Mr. Neal said that if a plan had been approved, the company would withdraw by 2011, but without an agreement he could no speculate on when the company would make a move.