State Farm plans to end property insurance in Florida

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— Florida’s good neighbor is leaving the neighborhood.

State Farm Florida — one of the largest providers of homeowner’s insurance in the state — announced today it plans to stop selling property insurance in the state.

The move was prompted by the company’s inability to get adequate insurance rates in Florida, said State Farm Florida spokeswoman Michal Connolly.

State Farm serves about 1.2 million policyholders in Florida. The company, once the largest insurer in the state, now insures 703,000 homeowner policies.

It’s not just homeowners that will be affected, though. Connolly said the company plans to drop all lines of property and casualty insurance on renters, condominiums and boat owners.

Automobile policyholders will not be affected.

State Farm Florida was established in 1998 and is a stand-alone subsidiary of State Farm Mutual Automobile Insurance Co. The company has been battling with state insurance regulators for more than a year over proposed rate hikes the company says it needs in Florida’s hurricane-rattled property and casualty market.

“This is not an action we wanted to take, but one we must take given the realities of the Florida property insurance market,” said Jim Thompson, president, State Farm Florida, in a statement. “We regret the impact this will have on our customers, employees and agents in Florida.”

Gov. Charlie Crist pulled no punches when asked about State Farm’s decision.

“They probably charge about the highest rates in the state anyway,” Crist said. “I think Floridians will be much better off without them.”

Floridians are already taking advantage of lower rates. Mike Gold, chief executive officer of Boca Raton-based People’s Trust Insurance Co., said his firm has experienced significant growth since officially opening its doors in October.

Gold said the company already has 30,000 customers across the state, and believes State Farm’s decision could mean more customers for his fledgling agency.

“I think what they’re doing is disgusting. They’ve been a part of Florida for a long time,” Gold said. “(But) on a personal note, from People’s Trust (perspective), we’re already over 53 percent cheaper than State Farm across the board.”

Florida Insurance Commissioner Kevin McCarty on Jan. 12 upheld an administrative law judge’s finding denying a 47 percent rate hike.

“We will carefully review State Farm’s intended plans to ensure that they are in compliance with Florida law, and we will explore all legal options as well,” McCarty said in a statement Tuesday.

State officials have 90 days to review the proposal.

Steve Watt, president of Gulfshore Homes in Bonita Springs, said State Farm’s decision could be beneficial to their business. Watt’s company has assembled a team of experts to work with current homeowners to make sure their homes are up to current codes and have the right amount of insurance.

“People need to understand what kind of condition (their home) is in,” Watt said.

Connolly said the agency will begin reaching out to customers immediately about the changes to their policies. The company needs to give six months notice to customers before making any policy changes.

“I encourage everyone to work closely with their agent to choose a new company that will offer needed coverage at a price you can afford,” McCarty said.

State Farm agents reached in Collier County today referred questions to Connolly.

Daily News correspondent Michael Peltier contributed to this report.

© 2009 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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