State Farm Florida Exit Plan Hearing

Posted in Auto Insurance , State Farm

May 8th, 2009

Florida state regulators have granted State Farm an appeal hearing in its case to withdraw from the Florida home insurance market over a period of two years. Earlier this year, State Farm stated its intention to drop 1.2 million property policies and about 700,000 homeowners from its coverage. The hearing does not surround State Farm’s withdraw, but rather the way in which it will exit the business.

State Farm’s Problem

The problem lies in the fact that Florida is requiring State Farm to sell its policies to private insurance companies, which is entirely against its business model and marketing plan. In fact, State Farm refuses to work with other private insurers because of company policy. State-run Citizens Property Insurance Corp is also prohibited from taking over any of the policies, due to the fact that it already has about 1.1 million policies. By insuring even more homes, Citizens would be placing itself at risk if a major hurricane destroyed homes in the storm prone Florida area.

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