Florida Insurance Commissioner Approves State Farm Withdrawal Plan, With Conditions
– Florida Insurance Commissioner Kevin McCarty today announced that he has conditionally approved the withdrawal plan submitted Jan. 27 to the Office of Insurance Regulation (Office) by State Farm Florida Insurance Co. (State Farm Florida) and State Farm Mutual Automobile Insurance Co. (State Farm Mutual). Today’s order
allows the State Farm companies to move forward with their plan
to withdraw from the Florida property insurance market, but stipulates several key conditions with which the company must comply.
Commissioner McCarty’s conditional approval order states in part:
- State Farm Florida shall surrender its Certificate of Authority within 30 days;
- State Farm shall facilitate the orderly transition of policies from State Farm Florida to the private marketplace in a method directed by the Office and shall not place any of the policies in Citizens;
- State Farm shall not interfere with the appointment of its agents to other private insurance companies to place State Farm Florida policies directly with those other private insurance companies;
- In an effort to minimize the impact of market disruption on all of its policyholders, State Farm shall issue pro-rata refunds of premium to any policyholder seeking to voluntarily cancel or non-renew a policy and will not short-rate the return premium for any policy in any line, whether it be automobile, boat, or property insurance coverage;
- State Farm shall consider all offers to buy or assume all or part of its business. A copy of any such offer shall be provided to the Office within 48 hours of its receipt.
“I could not approve the withdrawal plan State Farm submitted, because, as Florida law states, I believe that plan was ‘hazardous’ to State Farm policyholders and to the public,” said Commissioner McCarty. “State Farm intended to dump all of its customers into Citizens; and that is not acceptable for their customers or for the people of Florida. We have private companies that are eager to grow their businesses, and I expect State Farm to fully cooperate in facilitating a smooth transition of their policyholders to those companies."
The law governing the withdrawal of an insurance company and the Office’s review of a withdrawal plan can be found in section 624.430
(2), Florida Statutes.
State Farm now has 21 days to review Commissioner McCarty’s Order and to decide whether to abide by it or to request an administrative hearing by filing a petition with the Office.
A detailed chronology
of all events associated with recent State Farm issues is available on the Office Web site, www.floir.com
and in the Office’s Jan. 12
news release announcing Commissioner McCarty’s Final Order denying State Farm’s 47 percent average statewide rate increase.