Lawmakers want State Farm back, at any price

Mar 6, 2009

Insurance commissioner blasted for rejecting 47 percent rate increase

Florida Times-Union–March 6, 2009

TALLAHASSEE – Leaders from both parties urged Insurance Commissioner Kevin McCarty to try to bring State Farm Florida back into the property insurance market, and the top Democrat in the Senate upbraided McCarty at an afternoon committee meeting.

“I really would like for you to go back and assess why you should bring State Farm back into this market,” said Senate Minority Leader Al Lawson, D-Tallahassee. “Because I think what you have done is a travesty. It does not make sense.”

McCarty is facing bipartisan anger because of the insurance company’s decision, announced in January, to withdraw from the state. State Farm announced its move little more than two weeks after McCarty rejected the company’s request for a rate increase that would have averaged 47 percent statewide.

McCarty and Gov. Charlie Crist, who has said Floridians would “be much better off without” State Farm, have consistently cast the insurance company as the unfair party in the conflict, implying its voracious appetite for profit drove it to call for ever higher rates.

On Thursday, McCarty pointed out that State Farm’s rates have surged about 530 percent since Hurricane Andrew struck Florida in 1992, including a 52.8 percent increase two years ago. And the Office of Insurance Regulation has noted that a judge turned down State Farm’s request before McCarty rejected it.

But lawmakers have taken a different tack.

They have consistently questioned whether McCarty thwarted the free market and forced out the largest private property insurer in the state.

Ways and Means Committee Chairman J.D. Alexander, R-Winter Haven, said many consumers are finding even worse deals as they look for new plans before State Farm finishes its withdrawal.

“My office has been inundated with calls from folks who go to replace their State Farm policy and pay more than 42 percent more on a routine basis for, quite frankly, many companies who don’t have the capacity to make sure they pay” if a hurricane hits, Alexander said.

“I think it’s a great loss to this state to lose State Farm,” he said after the meeting.

Others question why State Farm wasn’t granted the increase when other insurers, including taxpayer-backed Citizens Property Insurance Corporation, have been.

“I’m concerned that we allow Citizens to keep raising rates, but we won’t allow the people who are in the private market to do the same,” Sen. Tony Hill, D-Jacksonville, said after the meeting.

“I think it’s more than just the increase, though,” Hill said.

Hill and other lawmakers say the open conflict between the company and the state’s top officials might make it impossible to lure State Farm back, even if the company was granted the rate hike.

The company plans to pull out over a two-year period. Each of its 1.2 million policy holders get at least six months’ notice before the policy is canceled. Parent company State Farm Mutual of Illinois will continue to offer auto, life and health insurance in Florida.

The company will eventually cancel more than 700,000 homeowners policies, almost 80,000 condominium owners policies and almost 62,000 renters policies. Almost 58,000 boat owners would be affected, too.