State Farm FLA Connection to DaVinci Reinsurance Ltd

Remember when Gov. Charlie Crist cracked on on State Farm Florida for raising their homeowner premiums too high. State Farm dropped customers and sued the Florida government. It turns out State Farm was far worse than we imagined.

The Sarasota Herald Tribune did an investigative story on State Farm. After State Farm Florida stopped selling homeowners insurance in Florida they set up with the shell company DaVinci Reinsurance Ltd. in Bermuda. State Farm gave DaVinci Reinsurance Ltd. $200 million in startup money. DaVinci Reinsurance Ltd is a "virtual corporation" with no real presence in Bermuda.

According to Bloomberg Businessweek DaVinci Reinsurance Ltd. operates in the Renaissance House at the address 12 Crow Lane Pembroke, Bermuda. According to Google Maps the address isn't correct. The Renaissance House is on E. Broadway, just off of Crow Lane. There are a lot of boats around the Renaissance House. It is hard to tell from the satellite photo if any offices are in the building.

State Farm Florida leaves the state. Citizens Property Insurance can not afford to provide insurance policies to every homeowner. The result is a market for DaVinci Reinsurance Ltd. The catch is DaVinci Reinsurance Ltd. charges the highest premiums in Florida. DaVinci Reinsurance Ltd. is excempt from Florida insurance regulations since the company is technically not based in the United States.

Another interesting fact is DaVinci Reinsurance Ltd. went after State Farm customers after the insurer dropped policies for many coastal homeowners. The Sarasota Herald Tribune has a chart DaVinci Reinsurance Ltd. homeowner insurance sales increasing has State Farm was losing policies.

State Farm Florida doesn't want to talk about it's ties to DaVinci Reinsurance Ltd.

A spokesman for State Farm responded to questions from the Herald-Tribune with a two-sentence statement.

"Reinsurance exists to help insurers protect homeowners from major catastrophes," wrote spokesman Phil Supple. "In this instance, State Farm is simply an investor and not actively involved in this reinsurer's underwriting decisions."

State Farm Florida claims not to own DaVinci Reinsurance Ltd. If that is true then why aren't the names of DaVinci's directors public. The Sarasota Herald Tribune asked State Farm Florida for the names of the directors. State Farm Florida refused to released that information. In truth, State Farm Florida owns a 40 percent share and sits on the board of DaVinci Reinsurance Ltd.

How DaVinci Reinsurance Ltd. works is they are a reinsurance company. DaVinci is a third party company that sells coverage to insurance agencies which, in turn sell to the public. DaVinci Reinsurance Ltd. targets high-risk hurricane properties. In 2005, Florida insurance policies were made up 23 percent of DaVinci's revenue. That number climbed to 41 percent by 2009.

Meanwhile, State Farm Florida told the Florida legislature they would lose money if they covered at-risk homeowners in a hurricane state. Florida Sen. Mike Fasano breaks down State Farm Florida's sales pitch to the legislature.

"State Farm has done a good job, an excellent job, in pulling the wool over the eyes of many of my colleagues in the House and Senate," said state Sen. Mike Fasano, a Pasco County Republican and a critic of State Farm.

"They've convinced them that State Farm is poor and they're losing money and the Legislature is willing to come to their rescue."

The Florida legislature responded by giving into State Farm Florida's demands.

Side note: the Sarasota Herald Tribune has done some excellent investigative reporting lately and deserve praise. Bloggers like to carp about how bad the media is. Credit should be given when the media gets scoops on important stories. Excellent job by Paige St. John and the Tribune staff.