State Farm pulling out of Florida
When the stars are out of alignment there isn’t much you can do. In the middle of an unpredictable real estate market and with hurricane season on the horizon, State Farm Insurance Company said it will drop all of its homeowners’ policies in Florida.
In January State Farm announced it was pulling out of the Florida homeowners’ insurance market, effective with policies renewing in November of this year, because it wasn’t able to charge high enough rates. Florida insurance regulators rejected State Farm’s request last year for a 47percent rate increase. This has resulted in State Farm officials stating this was a necessary step in order to avoid further financial weakening of their company. The company will, however, continue to write insurance policies for car and life insurance in the state.
You will recall that homeowners’ insurance became a major issue after Florida was ravaged by hurricanes in 2004 and 2005, causing tens of billions of dollars in damages. As a result, some insurers have stopped writing new policies or are jettisoning existing customers. The consequences of State Farm also pulling out could increase the strain of losing insurance companies even further.
As of September, State Farm had the second largest share of the Florida homeowners market with over 700,000 homeowners’ policies in force. Many of their customers could end up with either the state-created insurer of last resort, Citizens Property Insurance Corp., or with one of the new smaller insurance companies that are popping up around the state.
Citizens has grown in recent years to become the largest insurer of homes in Florida, and an increase of State Farm policy holders could increase the financial pressure on Citizens even further. This couldn’t have come at a worse time for Florida, since Citizens has been trying to shed some of its policies.
If you currently have a State Farm homeowner’s policy here is some information that could help you in the coming months: State Farm’s non-renewal process will not begin until November, 2009.
It will provide customers with 180 days (6 months) notice before their policies are non-renewed. Since homeowners’ policies are annual policies, you can anticipate a non-renewal notice six months before the scheduled expiration of the policy.
Homeowners can talk to their State Farm agent, to an independent agent or to Citizens Property Insurance Corp. in choosing another company.
State Farm will continue to service its customers’ policies until the last policy has been non-renewed, probably more than two years from when it surrendered its license in February.
In addition, homeowners can log-on to www.fmap.org which is the Florida Market Assistance Program Web site. This organization was established by the Florida Legislature in 1985 to assist consumers in obtaining property and casualty insurance from authorized insurers. The FMAP provides a variety of programs for consumers, agents and insurance companies, including an online consumer and agent referral program as well as Citizens Property Insurance policy updates. A data base is maintained of consumers seeking insurance coverage, and is matched with participating licensed Florida agents.
If you believe in astrology, you might want to have the charts done for all the major insurance companies in the country. In fact, you should probably start with Citizens since its well being is apparently going to be tied into all of our well beings for the foreseeable future. We can only pray their stars are in perfect alignment.