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State Farm Faces New Deadline For Appeal

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By RUSSELL RAY | The Tampa Tribune

Published: March 31, 2009

State Farm has until April 14 to file an amended appeal of the plan state regulators approved for the company's withdrawal from Florida's property insurance market.

The Office of Insurance Regulation denied the company's initial request for an appeal hearing last week because State Farm failed to explain how the withdrawal plan approved by the office would harm it financially.

In denying the request, Insurance Commissioner Kevin McCarty said the state-approved plan would help the company avoid large deficits by accelerating its withdrawal from the state.

The dispute centers on the way State Farm will shed more than 1 million property insurance policies.

The state-approved plan requires State Farm to sell those policies to other private insurers and bars the company from dumping any policies into state-run Citizens Property Insurance Corp., Florida's insurer of last resort.

But under State Farm policy, State Farm agents can offer services only for State Farm and Citizens. State Farm said the practice is a major element of the company's business model and isn't willing to abandon it.

State Farm officials, however, say they are hopeful an agreement can be reached with regulators and that an appeal hearing won't be necessary.

State Farm announced in January plans to drop 1.2 million policies, including 700,000 homeowners, after state regulators rejected the company's request to raise rates 47 percent on average statewide.

Reporter Russell Ray can be reached at (813) 259-7870.

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