Yesterday, Chad Hemenway, associate editor of BestWeek, reported that State Farm and Florida’s Office of Insurance Regulation jointly moved to delay the administrative hearing that will address State Farm’s move to leave Florida’s property insurance market. The saga continues….
State Farm Florida Withdrawal Hearing Moved to December
TALLAHASSEE, Fla., Sep 29, 2009 (A. M. Best via COMTEX)
In a joint filing with the Florida Division of Administrative Hearings, the Office of Insurance Regulation and State Farm Florida again moved to push a hearing to address the insurer’s desire to leave the property insurance market back another 30 days.
The order from DOAH states, "the parties are hopeful that their continued discussions will allow them to arrive at an acceptable resolution. Such a resolution would obviate the need for a final hearing in this matter."
The new date for the hearing is Dec. 17. A hearing was rescheduled recently from October to Nov. 17. The DOAH order says the OIR and State Farm Florida each said they would need to begin the discovery process of the proceeding now in order to meet the Nov. 17 date and that "the expense, distraction and adversary nature of such discovery would interfere with the parties’ settlement efforts."
Recently, Florida Insurance Commissioner Kevin McCarty told members of the Florida Cabinet that it was possible State Farm Florida could remain part of the property insurance market in some capacity. The insurer and regulators each say they continue to talk about all possibilities.
State Farm Florida filed a withdrawal plan at the end of January that called for its last nonrenewal at the end of 2011. Under current conditions, the insurer said it would be insolvent around the same time. State Farm Florida plans to continue to write automobile insurance. McCarty approved State Farm Florida’s two-year plan but he wants to bar State Farm from penalizing policyholders for terminating their contracts early and from preventing its agents from working with other companies. McCarty also had concerns that the company had no plan to transfer its policies to the private market instead of state-run Citizens Property Insurance Corp. Furthermore, the OIR immediately wants State Farm’s certificate to write insurance, but the company wants to hold it during the course of its exit from the market (BestWire, Feb. 13, 2009).
A.M. Best Co. in June downgraded the financial strength rating to B (Fair) from B+ (Good) and issuer credit rating to bb from bbb- of State Farm Florida Insurance Co. The outlook was revised to negative from stable. This was based on State Farm Florida’s recent "significant deterioration in earnings and risk-adjusted capitalization and the expectation that this deterioration will continue over the near to intermediate term," A.M. Best said (BestWire, June 18, 2009).
The top five writers of homeowners multiperil in Florida, according to 2008 A.M. Best Co. state/line product information based on direct premiums written, were: State Farm Group, with a 17.7% market share; Citizens Property Insurance Corp., with 16.2%; Universal P&C Insurance Co., with 7.2%; USAA Group, with 5.1%; and Tower Hill Group, with 4.5%.
(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)
You can read the article as it was posted by clicking here.