State Farm to End Some Florida Policy Renewals

Published: Mon 01 Feb 2010

Thomas Kristoffersen

Some State Farm customers in Florida are getting hit in a big wave and they don't even need to head to the beach. They are among a portion of the insurance company's 714,000 customers being told their coverage will not be renewed.

The first of a total of 125,000 policyholders will have their notices with the bad news mailed this week, starting with some whose renewal dates would have been Aug. 1. The mailings will continue for the next 18 months in the hurricane-prone state as State Farm tries to reduce its liability.

The notifications will be sent on a rotating basis to allow customers at least six months to find another insurance company. The last set of notices will go out in early 2011 for those policies that are scheduled to be renewed in July of next year. It's been two years since State Farm wrote any new policies in the state.

Although the company hasn't publicly identified where the dropped policyholders live, agents said most are on the state western coast, from Collier through Pasco counties. These are considered high-risk areas.

A few years ago State Farm stopped renewals on 50,000 policies for home insurance coverage within a mile of the coast, with most in South Florida. A company spokesman said no new coverage has started in the southern region of the state since Hurricane Andrew struck in 1992.

A year ago State Farm said no new property insurance policies would be written in Florida. The announcement followed state Insurance Commissioner Kevin McCarthy's decision to turn down the company's request for a 47.1 percent rate hike, which State Farm contended was necessary to remain financially viable. The insurer is a subsidiary of Illinois-based State Farm Insurance, considered among the world's best capitalized insurance companies.

A deal was made to allow State Farm to raise rates a maximum of 14.8 percent for home and condominium policies. In turn, the company decided against pulling out of the property-insurance business in Florida.

The approximately 850 agents who write State Farm policies in the state already have been told which customers will no longer be covered. Since the agents are independent contractors, some still might be able to provide replacement coverage.

At least 13 insurance providers have received approval from State Farm to coordinate sales of new coverage for those policyholders being dropped. The companies include United Property & Casualty, Security First, Florida Peninsula, and American Integrity.