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State Farm Customers Seeking Refunds Should Sit Tight

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By JOHN HIELSCHER

Sarasota Herald-Tribune

Published: September 12, 2008

State Farm customers hoping for a quick check on those new state-ordered refunds, sit tight.

It looks like the refunds will not be going out for at least three months, and current customers may get a policy credit, not a payment.

Florida insurance regulators ordered State Farm this week to issue $120 million in refunds or policy credits to customers who did not receive or were not told they could get premium discounts for adding hurricane protection to their homes.

An estimated 98,000 State Farm customers - 10 percent of its home, condominium, renters and condo association policyholders - will receive the average $1,225 credit or refund.

According to the Office of Insurance Regulation order, the insurer has three months to submit a list of eligible current and former policyholders to OIR, and as long as a year to get the refunds out.

"It's going to take a considerable amount of time to identify the individuals and everything that goes into it," company spokesman Chris Neal said.

The regulators say Florida's largest private insurer failed to comply with a 2005 law requiring it to tell customers about discounts for wind mitigation, such as hurricane-resistant windows, when their policies were issued or renewed.

OIR spokesman Ed Domansky said policyholders can review their policies but may be unable to tell whether they will be eligible for the refunds.

"I don't think there is a specific way or place they would know if they actually are going to get the discount by looking at their policy," Domansky said. "Even their agents won't know who exactly will be getting the credit or the refund."

Eligible policyholders who since have been dropped by the company will get refunds.

Based on the order, refunds or credits will go to policyholders who renewed in 2006 from Jan. 1 to June 30 if they applied for and qualified for a discount but failed to get it retroactive to their 2004 renewal date.

Customers who renewed in 2005 between Jan. 1 and June 30 and did not apply for a discount, whether they qualified or not, also will get refunds or credits.

The amount each receives will be based on the period between their 2004 and 2006 renewal dates and will include 7 percent interest. It also will depend on how much wind mitigation customers added to their homes.

The company insures about 1 million homes, including 53,800 in Sarasota, Manatee and Charlotte counties.

The OIR's action - which includes a $1 million fine against the company - comes as State Farm is appealing the denial of a 47 percent rate increase.

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