Polk County board writes to Crist about State Farm

Feb 5, 2009

Polk County News Chief--February 5, 2009

By Donna Kelly

BARTOW – Polk County commissioners voted unanimously Wednesday to send a letter of concern to Gov. Charlie Crist about the future of State Farm Insurance in Florida and, consequently, in Polk County.

The insurance giant, which operates a large regional office in Winter Haven, announced Jan. 27 that its subsidiary, State Farm Florida, was leaving the state’s property insurance market to avoid continued financial losses.

Commissioner Bob English, who presented the letter to the commission, voiced concern that if State Farm, which he said provides 1,700 jobs and pays more than $600,000 in property taxes to the county, is unable to reach an agreement with Crist and state lawmakers, then the local economy will suffer.

Addressed to Crist and state Insurance Commissioner Kevin McCarty, the letter explains the importance of the jobs and revenue State Farm provides the local economy as well as the community volunteerism of its employees.

“In addition to being our good neighbors, they are also active in our civic organizations, churches, youth sports, charities, schools, and public awareness campaigns,” the letter states.

“Currently over 47,000 households in our county choose to do business with State Farm. Your actions in Tallahassee have taken (and may in the future take) away the Polk County consumers’ right to choose which insurance company they wish to do business with. We feel our consumers have a right to choose who they do business with, not Tallahassee,” the letter states.

It ends with a request that Crist and state legislators allow State Farm to raise their rates “to a profitable level” and to work with the insurance industry to “create a healthy insurance market.”

While State Farm does employ 1,700 people at its headquarters on Cypress Gardens Boulevard in Winter Haven, State Farm spokeswoman Michael Connolly has said that if the company’s filing to leave the property insurance market is approved by the Florida Office of Insurance Regulation (OIR), about 300 employees could be impacted, but it’s too soon to tell.

Julie Johnson, the human resources assistant manager for State Farm, has said that if the plan is approved and employees are impacted, the company has resources to help them. Options include a relocation package to other State Farm branches.

The County Commission’s letter is a reaction to a tug of war between State Farm and state insurance regulators that began when state officials refused to allow the insurance company to raise its rates 47.1 percent in Florida. State Farm responded by announcing it will begin phasing out its homeowners insurance over a-two year period. Crist countered by saying that if State Farm pulls out of the Florida market, then it should not be allowed to sell other lines of insurance in the state.

“The governor and several legislators are striking against them,” English told the commission. “I think we can all agree that the insurance market has fatal flaws. This does not bode well for the economic situation in our county.”

English said the letter was to “encourage them to work with State Farm and other insurance companies for a solution.”

Commissioner Jean Reed asked if she needed to recuse herself from the vote because her daughter works for State Farm. After being reassured by County Attorney Michael Craig this was unnecessary, she voiced her support of the letter.

“State Farm does add a lot to our community,” Reed said. “I think it is a good thing to take action.”

Commissioner Ed Smith pointed out that the State Farm parent company is doing well and that the 47 percent rate increase will only be felt in Florida, not nationwide.

“We in Florida got ourselves in an insurance mess when we allowed insurance companies to break themselves off into Florida companies,” Smith said.

Smith said he wasn’t against sending the letter, but he questioned whether it would help the situation.

“The solution is to disestablish these Florida insurance companies,” he said. “Insurance is about shared risk.”