State Farm Abandoning Florida Property Market

State Farm Insurance said Tuesday it will leave the Florida property insurance market within two years because it cannot raise premiums high enough to offset the hurricane risks.

The privately held company serves 1.2 million policy holders in Florida and is the state's second-largest property insurer, next only to a state-run pool.

Automobile policyholders would not be affected, the company said in a statement.

"This is not an action we wanted to take, but one we must take given the realities of the Florida property insurance market," State Farm Florida President Jim Thompson said in a statement. "We regret the impact this will have on our customers, employees and agents in Florida."

Established in 1998, State Farm Florida, is a stand-alone subsidiary of State Farm Mutual Automobile Insurance, and has been battling with state insurance regulators for more than a year over proposed rate hikes that the company says it needs in Florida's hurricane-rattled property and casualty market.

On Jan. 12, Florida Insurance Commissioner Kevin McCarty upheld an administrative law judge's finding denying a 47 percent rate hike.

"We will carefully review State Farm's intended plans to ensure that they are in compliance with Florida law; and we will explore all legal options as well," McCarty said in a statement Tuesday.

The company said it plans to drop all lines of property and casualty insurance including homeowners, renters, condominium and boat owners.

The company, once the largest insurer in the state, holds 703,000 homeowner policies. Citizens Property Insurance, the state-run pool established as an insurer of last resort, is Florida's largest property insurer.

State officials have 90 days to review the proposal. The company would then be required to give policy holders at least 180 days notice before dropping them. But McCarty acknowledged there might be little the state can do if the company chooses to follow through on its plans to leave.

"I encourage everyone to work closely with their agent to choose a new company that will offer needed coverage at a price you can afford," McCarty said.

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