News & Updates


Insurance companies await fate of State Farm policies

By Jim Ash
Florida Capital Bureau Chief 

Florida’s top insurance regulator said Tuesday that the market is improving, but he acknowledged that many challenges remain.

Appearing before Gov. Charlie Crist and the Cabinet, Insurance Commissioner Kevin McCarty said that the 29 new companies that have come to Florida since 2006 have written more than 747,000 policies. However, McCarty acknowledged that a handful of them are struggling financially and are being watched closely by the department.

The recession, difficulties finding backing on the reinsurance market, and discounts the companies are forced to give homeowners for storm hardening are the chief culprits, McCarty said.

"We are continuing to be pressed by the reinsurance market, and this is happening without a storm," McCarty said. "This is something outside of our control."

Attracting new companies is vital at a time when State Farm, the state’s largest private insurer, is planning to pull out of Florida. It began the process after the state denied a 47 percent statewide average rate increase in January.

The eventual non-renewal of more than 777,000 State Farm policies has been put on hold while the company challenges the state’s conditions for withdrawing.

A "significant" number of companies have expressed a willingness to sweep in and start picking up State Farm customers, but they are waiting to see the final outcome, McCarty said. He estimated that there are more than 200 companies writing property insurance policies in Florida.

Crist came under fire this spring after he vetoed the so-called State Farm bill, otherwise known as HB 1171. It would have given larger companies regulatory flexibility to charge higher rates.

Crist, who is running next year for the U.S. Senate, told reporters he still has no regrets.

"Listen, we’re talking about a company that charges the highest rates in the state, or certainly among them," he said. "If that isn’t a company that’s already left the state, I don’t know what is."

Crist took credit for working with regulators and lawmakers to lower rates an average of 16 percent over the past two and a half years.

But one of the sponsors of the legislation said McCarty’s latest report only proves his point.

"I think one of our problems with insurance is that we have proven that overregulation has driven up prices," said Sen. Mike Bennett, R-Bradenton. "The prices of the companies that are remaining are going to go through the roof."

Citizens, the state-run insurance company — and the largest property insurer in the state with more than 1 million policies — shed 400,000 customers last year to private companies, said spokesman John Kuczwanski. This year, only half as many Citizens policy holders found private coverage, he said.

The House sponsor of the State Farm bill said he is preparing to file a new version, but he couldn’t say whether it would appear in a potential special session in November.

"That’s not my call," said Rep. Bill Proctor, R-St. Augustine. "We need something. I don’t think Citizens and those 29 companies give us the conditions we need.