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State Farm To Stop Writing New Homeowner Policies

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By JOHN HIELSCHER, Sarasota Herald-Tribune

Published: February 25, 2008

In a move bound to further roil Florida's turbulent insurance market, State Farm has decided to stop writing new homeowners insurance policies.

State Farm, Florida's largest private property insurer, is reacting to last year's insurance reform legislation that forced companies to reduce rates.

The company is already in the midst of dumping 50,000 of its coastal policyholders, including an estimated 7,500 in Sarasota, Manatee and Charlotte counties.

But it was not expected to become one of the dozens of insurers that have stopped writing new business in Florida since the 2004-05 hurricane seasons.

The company will also stop writing new renters and commercial policies, all part of its goal to reduce risk in Florida. It will continue to write new auto policies, a lucrative and less-risky business in which it ranks No. 1 in the state, with 2.8 million customers.

State Farm now has about 1 million homeowners policies, covering about one in every five Florida homes. That will drop by 50,000, or 5 percent, under its previously announced cutbacks.

The company had stopped writing new homeowners policies in some coastal counties years ago. But it had continued to offer coverage in this area, where it now has about 58,000 policies in Sarasota, Manatee and Charlotte counties.

State Farm's nearly 900 Florida agents were informed of the decision late last week.

The decision comes as state lawmakers prepare to again tackle the cost and availability of property insurance in the coming session. Currently, state insurance regulators have no authority to prevent insurers from halting new business.

State Farm, based in Bloomington, Ill., has said it paid out more than $4.4 billion in claims from the eight hurricanes that hit Florida in 2004 and 2005.

The company's decision will likely put more pressure on Citizens Property Insurance Corp., the state-run insurer of last resort that has become Florida's largest carrier.

Citizens had boasted last week that its policy count had dropped to 1.25 million from a peak of 1.4 million.

New insurers took out nearly 250,000 policies from Citizens in 2007.

Only about two dozen private insurers are selling new homeowners insurance in this part of Florida, according to the Home Insurance Buyers Guide LLC, a database of insurers.

But some of them will only cover newer homes or those not near the coast.

Homeowners often wind up with Citizens.

The Florida Insurance Council says the private market has improved, with 28 new property insurance writers coming into the state in the past two years.

But others have left or have stopped writing new business, including such major players as Allstate, Nationwide and Liberty Mutual.

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