State Farm to Drop 50,000 Homeowner Policies
I'm disappointed, but not surprised that State Farm is going to drop 50,000 homeowners policies. Governor Charlie Crist temporarily freezed property insurance. The industry responded by suing the state. Homeowner insurance companies view Florida as a financial loser. State Farm will drop the policies starting Jan. 1, 2008. Many coastal homeowners will have to search for new insurance. Other inland homeowners are also affected.
Florida government appears to be playing tough with State Farm.
"If State Farm reduces exposure in Florida through the non-renewal of property insurance policies, the Office of Insurance Regulation will revisit State Farm's rates to ensure they are not excessive," Florida Insurance Commissioner Kevin McCarty said.
Short answer: if State Farm doesn't want state government looking into their rates then they better increase homeowner coverage. McCarty is not finished with State Farm.
"These actions are inconsistent with State Farm's previous statements outlining their underwriting intentions," McCarty said in a statement released by his office. "The office is in the process of reviewing these filings to ensure they are consistent with Florida law."
The South Florida Business Journal reports that McCarthy's comment might mean that he will not allow any of the policies to be cancelled.
CFO Alex Sink described State Farm as having "disregard for long-standing customer relationships."