Here are the conditions for State Farm's withdrawal from Florida.

[madfloridian]

We got a letter from our long time agent today asking us to meet with him. My first reaction...what the hell for? Why bother. If you won't insure our home, you don't get to insure our car.

I actually feel for the agents here, as it was a corporate decision. The agents will be hurting, I fear. I am livid. About 40 years we have been with them, with only one claim.

The conditions.

Florida Insurance Commissioner Approves State Farm Withdrawal Plan, With Conditions

Commissioner McCarty’s conditional approval order states in part:


* State Farm Florida shall surrender its Certificate of Authority within 30 days;

* State Farm shall facilitate the orderly transition of policies from State Farm Florida to the private marketplace in a method directed by the Office and shall not place any of the policies in Citizens;

* State Farm shall not interfere with the appointment of its agents to other private insurance companies to place State Farm Florida policies directly with those other private insurance companies;

* In an effort to minimize the impact of market disruption on all of its policyholders, State Farm shall issue pro-rata refunds of premium to any policyholder seeking to voluntarily cancel or non-renew a policy and will not short-rate the return premium for any policy in any line, whether it be automobile, boat, or property insurance coverage;

* State Farm shall consider all offers to buy or assume all or part of its business. A copy of any such offer shall be provided to the Office within 48 hours of its receipt.

There is a lot more at the link.

We have known our agent personally for ages. There is nothing good to come of this kind of corporate selfishness. There is nothing good to come of Charlie Crist thumbing his nose at them and saying the state would be better off without them.

It's a bad time, and a sad time.

[Tangerine LaBamba]

1. Wow!

I'm not up on insurance law, but I don't recall an insurance company quitting a state. Maybe I've missed a lot, but this strikes me as disastrous.

What are you going to do now?

I have the feeling that, no matter what you do, you're going to be paying more. A lot more.

This is bad, you're right.

[madfloridian]

4. It's pretty bad. I think Allstate tried it as well.

Don't know the outcome there.

[Patsy Stone]

36. Allstate cancelled our policy out of the blue,

got out of the Florida home insurance business, and Royal Palm from Ormond Beach took us up.

http://www.insurancejournal.com/news/southeast/2006/05/15/68356.htm

[Horse with no Name]

12. They quit Texas at one point too

http://query.nytimes.com/gst/fullpage.html?res=9C00EFDA163BF937A35753C1A9649C8B63
>>>snip
Hundreds of thousands of homeowners in Texas are expected to lose their insurance coverage in the next year while others are seeing huge increases in premiums in a crisis that could harm the state's economy. It has already become a central issue in the governors' race.

Experts say the situation in Texas is the most extreme in the nation, at a time when homeowners' insurance has become harder to attain and more costly in every state, with insurers saying it is a marginally profitable part of the business at best. As a whole, the insurance industry is in a difficult period, as companies have suffered huge losses from the stock market collapse and from the aftermath of the Sept. 11 attacks.

The problems in Texas with homeowners' insurance, though, derive mostly from unique circumstances that have left policyholders paying the highest premiums in the nation even as insurers complain that they have lost billions of dollars on homeowner policies in the state. Not only is Texas a magnet for bad weather, like Tropical Storm Allison last year, but analysts say its regulatory structure has managed to hurt both insurers and consumers.

''The Texas homeowners insurance market is the most dysfunctional in the United States today,'' said Robert Hartwig, chief economist for the Insurance Information Institute, an industry-financed research organization. ''A confluence of a lot of events has brought the market to the brink of collapse.''

[Jakes Progress]

38. A large portion of the problem is

insurance companies spreading their money in real estate, stock market, and investment programs. They tried to do all of it and when they lost big to the enrons, they claimed that the state was costing them too much and needed to raise rates. An analysis of the profits and losses from their insurance showed healthy profits. It was in their speculation enterprises that they were losing money. Customers were asked to foot the bill for their lousy investments. It was bad enough that even the Texas lege that usually lives in the corporate pockets cried foul.

[lonestarnot]

41. Oh sure sure. I'd trust that industry to police itself. Whose regulations?

[Mojorabbit]

2. We have everything through

state farm. I am dreading this whole thing.

[madfloridian]

3. We have everything through them as well. I feel sick about it.

[Dr.Phool]

21. Me too.

And I just renewed our homeowners policy 2 weeks ago.

[JCMach1]

5. It took my mom several months of looking to find an insurer when their insurer left the state

and they live in the middle of the state with no claims for 50 years and no huge threat from hurricanes.

[barb162]

26. When an insurer writes a state

that insurer has to write all areas; they can't redline everything 10-20 miles from the coast. It's clear the insurers are doing this on the gulf states and the reasons why are obvious to everyone. After Katrina and a few others, no insurer wants anything to do with the Gulf States. I heard some stories about auto and other insurance rate increases in LA right after Katrina...jaws were dropping.

[onethatcares]

6. this is why we need a National Catastrophic Insurance Fund.

to get these bastards out of the business. I mean, hell, even with graphs and charts you are never gonna predict who's gonna get hit with what.

BTW, we(my wife and I) got dropped by Nationwide about 3 years ago, we moved our auto/boat insurance to StateFarm. Our property insurance is with Citizens and it's only $2880.00 a year in premiums. If you have a home built after 1965 Peoples is a good place to check. Sadly, our home was built in 1926/

That $2880.00 is just a bit more than the $785.00 we paid for years.

[barb162]

17. But they do know Florida will get hit, just like TX and some others

Who would pay into the NCIF?

[OmahaBlueDog]

39. Here's what you could do.

After 9-11, there was a brief period where it was a real bear to get Work Comp. No one wanted to take the reinsurance hit if, say, a whole building full of Amalgamated Widget employees all got killed and injured at once. So the feds formed what was called the Terrorism Re Insurance Act (a.k.a. TRIA) (It has another acronym now that I can't recall). It added a small surcharge to every COmp policy that basically said that if losses exceeded a certain figure, the fund would kick in as a backstop. This was really helpful in thawing the reinsurance markets for these carriers.

Basically, the way it could work is this: homeowners insurers in all states are mandated to participate, and actuaries figure out how to reinsure at, say a $500,000,000 deductible per event/per carrier. It would be calculated as an add on to charged premium, so everyone pays in to the fund in proportion to their risk (i.e. if you charge 1%, a $3000 policy in Florida pays $30, while a $700 policy in South Dakota pays $7). Note that I'm just making up numbers here to be illustrative. You put the fund in place, and then when an event hits (massive midwest flood, big mid Atlantic ice storm, Katrina, eartquake in LA, whatever), any carrier taken beyond $500M in losses can make a claim against the fund for any losses above that amount.

With the fund being a pure back stop with no profit motive, it would probably cost very little in real terms, and as a practical matter - if the insurers in a region all get wiped out, the feds will have to help cover the damage anyway.

[Ohio Joe]

7. Back a few years ago...

When I was still working for Nationwide, they did the same thing. They felt there was too much potential for loss in FL so they left.

[madfloridian]

9. Allstate, too.

It's a shame.

[madfloridian]

8. 800 agents and 4500 staffers with State Farm.

The plan had been to dump us all with Citizens...at least this has language addressing that issue.

Does it have teeth? I don't know. Read that Alex Sink our CFO thinks it's good.

[barb162]

16. Some will end up with other insurers and brokers and others

will be out on the street.Some will start their own agencies.

[barb162]

28. Interesting article with comments

http://www.tampabay.com/news/politics/state/article974612.ece

Why doesn't Florida just raise property taxes to get money into this fund? Once the actuaries think they have enough, lower the property taxes again.

[Kurovski]

10. K&R. (nt)

[madfloridian]

11. Thanks...at least they are setting some conditions.

It's bad.

[madfloridian]

13. More on the situation.

People are angry. Some of the agents are being decent, some are being a little arrogant.

http://www.wjhg.com/news/headlines/39680647.html

"Hundreds of State Farm customers started calling the Chief Financial Officer’s hotline when the state announced it had approved the company’s withdrawal from Florida. What triggered the panic was the order for the company to surrender it’s certificate of insurance within 30 days. Alex Sink, the Chief Financial Officer’s hotline, received 170 calls from State Farm customers Friday afternoon.

“All I can go by is the information they give us.”

Tammi Torres, Sink’s Consumer Affairs Director, says more State Farm customers were on the line Monday morning.

“They’re concerned; they’re worried about going to another insurance company.”

What sparked the panic was an announcement Friday that State Farm must surrender its certificate of insurance within 30 days. Insurance Commissioner Kevin McCarty explained the order this way:

“This does not, in any way, jeopardize the policy holders in the state of Florida.”

Even with the order, State Farm customers will have at least six months and perhaps up to two years to find replacement coverage. Policy holders should know when their policy expires and begin looking for that coverage now."

[HooptieWagon]

14. So, why are still allowed to write auto insurance?

once they decided to leave, they shouldn't be allowed to cherry pick and keep the most profitable line.

[barb162]

20. It looks like their State Farm Auto is withdrawing too

so there will be no cherrypicking

[madfloridian]

22. I think they expect to keep writing auto insurance.

I think many people will go with someone else though.

[barb162]

29. From the FLorida gov. site

"Friday, February 13, 2009

TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty today announced that he has conditionally approved the withdrawal plan submitted Jan. 27 to the Office of Insurance Regulation (Office) by State Farm Florida Insurance Co. (State Farm Florida) and State Farm Mutual Automobile Insurance Co. (State Farm Mutual). snip"


I have State Farm too for a long time and I thought wow they sure are raising their rates even for no claims ever. Umbrella has gone up like crazy too for the first million. And I'm not even in Florida. The problem is often strange things, like storms in Nebraska and anywhere else which were unexpected and then worldwide markets raised reinsurance rates the next year for all insurers. The Gulf States, though, are a whole different category, like I'm telling you something new.

[madfloridian]

31. From The Ledger today....guess there is a lot of confusion.

http://www.theledger.com/article/20090215/REPORTER/902090415/1374?Title=State_Farm_Sets_Off_a_Scramble

"People were angry. And Delaney was more than happy to help them.

"Recently, State Farm announced it was leaving the (Florida) market, and I'm getting a lot of calls from people who are angry about this, and who question their sense of business loyalty," said Delaney, who runs Great Florida Insurance, an agency on U.S. 27 in the South Lake County section of Four Corners.

What many of State Farm's former clients want to know is whether there are alternatives out there for those who are losing their home insurance policies. Delaney said the answer is definitely yes.

"State Farm still wants to ensure their autos, and I have clients coming to me saying 'Quote me on both' (auto and home insurance)," Delaney said. "I never drink another company's Kool-Aid, but I'm doing a lot of business right now."

Our letter indicates they may cover autos...maybe it is not certain yet.

[barb162]

34. Yeah, and then you lose the multi-line discounts

if you keep just the autos with them as you know. Still I always like their prompt claim service and that sort of thing. Chubb and Travelers are still the creme de la creme with beautiful policy coverage but I don't know if they are writing in Florida at all these days. I think Travelers was only writing houses with RV over 500,000 in my state and they like good new roofs a lot. And they both pay claims, are extremely honorable, unlike other companies,which may try to stiff you at every turn.

[HooptieWagon]

24. Hmmm, not from what I've read, but I may be a fews days behind. n/t

[bertman]

15. My condolences to all who are facing this traumatic change in their lives.

[barb162]

18. They've been raising rates somewhat dramatically lately

[barb162]

19. Try calling Geico and some other internet based insurers

[flvegan]

23. They asked for a 100% premium hike, and are taking their toys and going home.

Fuck them. They can cram every bit of their insurance biz here.

I do feel for the agents. My roomie has SF auto insurance, and I've met her agent and I know he's going to suffer. No winners here.

[smalll]

25. The automobile has become the bane of American life --

It was a good thing, it seemed, at first -- it was freedom on wheels.

But now, all it brings us is bad planning (suburbia,) huge carbon footprints, sedentary lard-assedness, disconnection from our fellow-human beings, disconnection from nature and the weather, MANDATORY "insurance" (which leads necessarily to all kinds of overcharges, scams and general ridiculosity) --

and more important perhaps than any of these, it is when we are drivers that we give up our human rights and become slaves to the state and its enforcers: how many otherwise law-abiding people get snatched up by Johnny Law because they happen to be behind the wheel, and therefore open themselves up to criminalization because they have a busted tail light/are talking on a cell phone/had three beers at dinner/smoked a joint/don't have their kids in state-of-the-art age-appropriate "child seats"/are driving while black (or brown, or young, or poor...)

[Two Americas]

37. it is a haves versus the have-nots issue

There is a powerful "haves" bias here - which renders all pretensions of "liberal" and "progressive" pretty irrelevant - and that is reflected by how few people say what you are saying here, and how unpopular it is when someone does say it.

[Sancho]

27. Our company left a couple of years ago...

first we were stuck with Citizens. Charlie was on TV here telling everyone to use the state web site to compare and buy insurance. I called ALL of the companies on the list, and none would write a policy in Pinellas county. I called Charlie's office and told them he was lying on TV. Weird, but the next week I got three offers from new start up companies in the mail. I can't prove it, but I suspect the call prompted the offers - too much of a coincidence. When I roofed the house up to new codes, I got a certificate that took a grand off of the annual premiums.

Regardless, the premiums are triple and the coverage is worse. BTW, the big companies are making record profits in Florida. They LOST so much money in the wall street investments and now they can't cover the liabilities in a storm; so they pull out of the risky areas until the reserves are replaced - at least that is part of the story from one local economist that spoke to us. If the state won't let them cherry pick, they are out of here.

Some counties are also going to lose all the companies if they keep pumping groundwater and causing sinkholes in Florida - that is as much or more of a problem for the insurance companies than the storms now. Pasco and Hillsborough are having trouble getting policies now because of the pumping.



:dem:

[barb162]

30. I'll PM you re your comments

[havocmom]

32. When stock market does not perform, insurance companies have to cut their risks

They make the money in the market, so no market, no point in taking any risks of paying claims.

[madfloridian]

33. Good for them for not having to do risky things because they are an insurance co.

They are so lucky, aren't they? :sarcasm:

Bastards.

[havocmom]

35. Yep. They, of all people, know a sham operation when they see it

Bastards indeed; working on fear for profit, and then running when stuff to really be afraid of happens.

[OmahaBlueDog]

40. Investment performance would be bad for carriers in equities

OTOH, if a carrier was in the bond market right now, they could make excellent returns while holding on to your premium.