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Plenty Of Companies Want State Farm's Policies, State Says

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By CATHERINE DOLINSKI | The Tampa Tribune

Published: February 3, 2009

TALLAHASSEE - Private property insurers should be able to absorb the million-plus policyholders State Farm will orphan if the company withdraws from the market, a state regulator said Tuesday.

But that depends on State Farm cooperating to make the transition go smoothly, said Belinda Miller, deputy commissioner of the Office of Insurance Regulation.

Since State Farm's announcement last week that it was pulling out of property insurance in Florida, she said, "We've been absolutely inundated with calls from companies that want to take these policies."

Miller spoke after appearing before a House insurance committee Tuesday night, where State Farm officials explained why they are dropping Florida and their strategy for doing so over the next two years.

"This is a day we hoped would never come," said Jim Thompson, president of State Farm Florida.

Thompson and State Farm attorney Dave Hill said falling revenues, rising costs and state-mandated discounts are forcing the company to pull out. Without changes, they said, the company could be insolvent by 2011.

State Farm Florida's financial problems, Miller said, stem from pricey reinsurance the company is buying from its national parent company.

State Farm is awaiting approval from Miller's office of its exit strategy. Tuesday, Miller said the state is likely to reject the plan or approve it with stringent conditions to protect consumers.

State Farm needs to let its agents start writing policies for other insurers, Chief Financial Officer Alex Sink said in a letter to the company, which she released Tuesday evening.

Miller said national State Farm officials told her they would not permit that.

Justin Glover, spokesman for State Farm, said the company wants to allow its agents to transfer existing State Farm policyholders to other private insurers before they wind up in Citizens Property Insurance, the state-run insurer of last resort.

After the hearing, committee chairman Pat Patterson – an insurance agent by trade -- expressed doubts all State Farm policyholders will find alternative private insurance.

"It seems like there are quite a few people coming forward," said, Patterson, R-Deland. But "a lot of older properties out there that State Farm may have, those are probably the ones that are going to end up in Citizens."

Reporter Catherine Dolinski can be reached at (850) 222-8382.

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