Florida’s largest private insurer, State Farm, has decided to cease writing new policies for homes.
The move is not expected to affect most of the company’s 1 million current policyholders. But it will likely place greater pressure on the state-run insurance provider, Citizens Property Insurance Corp.
A State Farm spokesman told the St. Petersburg Times that the company decided to stop writing new policies for homes because Florida lawmakers passed legislation last year to reduce property insurance rates.
“We’ve got to have the reserves to pay claims of our existing customers,” State Farm spokesman Chris Neal told the Times.
Calls from The Associated Press to State Farm officials were not immediately returned Saturday afternoon.
Homeowners’ insurance has been a touchy subject in Florida lately, with lawmakers and Gov. Charlie Crist publicly bashing insurers for rate increases.
Regulators allowed State Farm to increase premiums by 52 percent in 2006, but legislative changes forced the company to lower rates by 9 percent statewide in 2007.
Florida officials have also been in a contentious fight with Allstate insurance companies over its homeowner policy rates.
Allstate insures roughly 300,000 homeowners in Florida, many who live inland and away from riskier coastal areas. It has dropped more than 400,000 policies in the past four years.
In January, the state briefly suspended Allstate’s ability to write any insurance policies, including auto, because it felt the company wasn’t being forthcoming in an inquiry about its insurance rates. A judge later overturned that decision.
Other insurers such as Liberty Mutual and Nationwide have also been withdrawing from Florida.
State Farm also has plans to drop roughly 50,000 home policies issued to coastal residents. The company, a subsidiary of Bloomington, Ill.-based State Farm Mutual, paid out more than $4.4 billion in claims after eight hurricanes struck Florida in 2004 and 2005.
Information from: St. Petersburg Times, http://www.sptimes.com
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