State Officials Need To Make Sure Insurance Gap Is Filled

Feb 16, 2009

Tampa Tribune--February 15, 2009

Thousands of State Farm policyholders around Florida are angry with the insurance giant and can’t wait to see the company leave.

Insurance Commissioner Kevin McCarty apparently feels the same way. He said the other day the sooner State Farm Florida withdraws from the state’s property insurance market the better.

“Quite frankly, State Farm has been acting in a condition hazardous to the policyholders and hazardous to the people of Florida,” McCarty said in an Associated Press story. “We do not believe that they can maintain trustworthiness and fitness to continue to do business in Florida.”

“What State Farm is trying to do is hold the people of Florida and their policyholders hostage and we’re not going to let them do that,” McCarty added. “We’re requiring them to use the private sector and not warehouse them in Citizens. Citizens is already overtaxed with the policies that they have.”

McCarty said in a story in the Tampa Tribune he is confident that private insurers will be able to absorb the bulk of policies State Farm will be dropping. He disagreed with those who claim that many private insurers in Florida don’t have enough capital.

Alex Sink, the state’s chief financial officer, said there are several insurance companies ready to fill the gap.

We hope McCarty and Sink are right.

Among those who do not share their confidence are some independent agents. They worry about what will happen if the state encounters a disastrous hurricane season similar to 2004.

Of course that year was unique with three storms hitting the state in six weeks. But it only takes one Category 5 hurricane to be devastating.

Will those other companies be prepared? We certainly hope so.

The independent agents claim they can find rates for State Farm customers that will be competitive. They likely will.

But not everyone will be so fortunate. Those who want to drop their auto coverage with State Farm simply because they are mad might have difficulty beating the company’s rates.

Florida is a high-risk property market and that is something every homeowner needs to remember.

At the same time, state officials need to remember the company’s withdrawal will affect more than 1 million Floridians who have policies on their homes, condos and businesses. That’s a bunch of people who are going to need to be covered.

It’s vital that this state does everything it can to make sure that happens.