State Farm’s arm in Florida says that it has to get out of home insurance business in the said state.
Citing weakening finances, the company said in an official statement, that it was not able to get approval for the adequate home insurance rates. However, the company still plans to keep auto insurance while other State Farm unites will continue selling health, life and other financial services. Out of the 655,000 policyholders affected by the move, 41, 563 are in Miami-Dade County, 47, 521 in Broward, 38, 868 in Palm Beach and 85 in Monroe County.
The proposal by State farm plans to phase out property insurance gradually in a two year period to give its clients time to find another insurance company. Regulators are given 90 days to review the proposal and approve or reject it. If approved by state insurance regulators, the company has to give a 180-day notice to affected policyholders. State Farm will then cease giving full property policies which include condominium, renters, boaters, mobile home, commercial liability, commercial marine, business property and homeowners insurance.
According to Insurance Commissioner Kevin McCarty, regulators have known about State Farms proposal for months. In fact, the home insurance company submitted last December the proposal detailing its plan to cut Florida policies by 2010.
McCarty gave assurance that he will give protection to Florida consumers against unnecessary destabilization in the home insurance market and to give them access to fair home insurance rates.
State Farm in Florida was denied its original proposal by the Florida’s insurance commissioner to increase fees by 47.1 percent. State Farm said that this figure was conservative as analysis supported a 67 percent increase.
President of State Farm Florida Jim Thompson said that the situation was unavoidable as the company’s resources would not be enough to cover expenses and claims in the future. He said that the home insurance company did not want to make the move and regret its effect on its clients, agents and employees.