State Farm to Cut Property Insurance in Florida

State Farm Florida Insurance Co. announced today that the company wants to stop writing property insurance in the Sunshine State.

State Farm, Florida’s largest property insurer, will phase out property policies over the next two years but will continue to provide auto, life and health coverage.

Company officials said State Farm was unable to cover its costs under rates approved by state regulators. The company blames its decision on its inability to obtain state approval for rate increases.

State Farm’s plan to discontinue coverage is subject to regulatory review, but the company said the process would take two years to allow policyholders to find other insurers.

Officials said State Farm Florida, based in Winter Haven, absorbed billions of dollars in losses in the 2004 storms and was only able to continue operating by borrowing $750 million from State Farm Mutual. Last July, State Farm Florida requested a 47.1 percent rate increase but was turned down this month by the Florida Office of Insurance Regulation.

State Farm Florida saw its surplus reduced by $201 million in the first three quarters of 2008, officials said. The company has 1.2 million property insurance customers in Florida.

In July, State Farm Florida filed for an overall statewide homeowners insurance rate increase of 47.1 percent, which was rejected by the Florida Office of Insurance Regulation on Jan. 12.

Below are listed the number of policies that will be impacted by State Farm Florida’s discontinuance of certain product lines:

• Apartment Policy, 2,631

• Boatowners Policy, 57,982

• Business Policy, 30,855

• Church Policy, 1,989

• Commercial Inland Marine, 2,661

• Commercial Liability Umbrella Policy, 3,749

Source: Jacksonville Business Journal