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State Farm Florida and OIR Resolve Withdrawal Request

State Farm Florida and OIR Resolve Withdrawal Request

State Farm Florida Insurance Company and the Florida Office of Insurance Regulation have entered into a Consent Order resolving a dispute arising from the insurer’s planned withdrawal from the Florida property insurance market.  State Farm Florida filed a withdrawal plan with the Office of Insurance Regulation announcing that it intended to discontinue its property insurance business in Florida over a two-year period.  The Office of Insurance Regulation approved the withdrawal plan but imposed several conditions on the withdrawal that the company found objectionable.  State Farm Florida therefore filed an administrative challenge to the OIR’s conditional approval.

The parties continued to discuss potential resolutions over the course of many months.  Earlier this year, State Farm Florida began to address some of its concerns over rate adequacy by filing changes to the discount programs in its rating plan.  The Office of Insurance Regulation approved changes to State Farm Florida’s discretionary discounts that amounted to a 28.4% overall premium impact.  The parties then continued to discuss the conditions of State Farm Florida’s planned withdrawal, ultimately agreeing to the terms of the attached Consent Order.

The Consent Order provides that State Farm Florida may reduce its exposures by 125,000 policies over a one-year period.  State Farm Florida is largest voluntary-market personal residential insurer in Florida, and even after this reduction it will continue to be the state’s largest private market insurer.  State Farm Florida agents having servicing contracts with other insurers will be able to place the nonrenewed policyholders with those other insurers, subject of course to those insurers’ underwriting requirements.  If the agents cannot place the policies with another insurer, State Farm Florida will notify the consumers how they may receive assistance finding a new insurer through Florida’s Market Assistance Plan.

Also as part of the Consent Order, the Office of Insurance Regulation has approved a 14.8% rate increase to be applied across the company’s homeowners and condominium unit owners policies.

State Farm Florida will dismiss its pending administrative action following this agreement with the Office of Insurance Regulation