News & Updates


State Farm might not leave Florida


Palm Beach Post

State Farm might not pull out of Florida’s homeowners insurance market after all, Florida Insurance Commissioner Kevin McCarty said Thursday.

McCarty said he’s “cautiously optimistic” that State Farm will keep at least some of its homeowners policys in Florida.

Bloomington, Ill.-based State Farm is Florida’s largest private insurer of homes, and it said in January that it would stop writing property policies in Florida, where it covers 700,000 homes.

“We’ve really been having intense negotiations with the company at very high levels,” McCarty said Thursday.

Neither McCarty nor a State Farm spokesman offered details of the negotiations.

“We don’t want to talk about it publicly until we reach an agreement,” said State Farm spokesman Chris Neal.

McCarty predicted State Farm will stay in Florida but will have a smaller presence. That could be good news for homeowners, who have seen premiums soar since Hurricane Andrew roiled the state’s insurance market in 1992.

“A leaner, smaller State Farm in Florida is better than no State Farm in Florida,” McCarty said.

Bill Newton, executive director of the Florida Consumer Action Network, agreed that homeowners will benefit if State Farm stays in Florida.

“It increases competition in the marketplace,” Newton said. “For them to drop all those policies would have been disruptive, and I’m not sure the market would easily have absorbed it.”

Citing losses and the risk of hurricanes, State Farm said it needed a big rate increase to continue conducting business profitably in Florida.

The company last year asked McCarty to approve a 47 percent increase. McCarty rejected the increase, saying State Farm hadn’t justified it. State Farm then said that it would pull out of the property market in Florida, though it still will sell auto, life and health coverage.

State Farm has yet to drop any policies in Florida. If it pulls out, an exit plan must be approved by state regulators. An October hearing was postponed.

Newton said it appears McCarty called State Farm’s bluff — and won.

“I’m cynical, but I thought it was a poker game all along,” Newton said. “State Farm has a good book of business. Why would they walk away from it?”