State Farm has a market share in the property insurance business that its competitors envy. These competitors are taking advantage of State Farm’s announcement that it intends to leave Florida’s property insurance market.

For example, People’s Trust Insurance Company is running full page newspaper advertisements with a headline:

"Has Your Insurer Skipped Town?"

It then lists rates which suggest that the average savings to a State Farm policyholder that switches to People’s Choice will be a whopping 53%! The ad pokes fun at State Farm by saying:

"So, say goodbye to the other insurance companies and the outrageously high premiums that will leave with them. Now is the time to make the switch to an insurance company that is proud to serve the people of Florida."

Given that People’s Choice can charge approved rates much lower than State Farm’s, one has to consider this as an additional indication that State Farm’s request for a 67% rate increase was based on sham economics, as found by the Office of Insurance Regulation and the administrative law judge who reviewed the matter.

State Farm is being ridiculed by those in its own industry. While State Farm may have anticipated that its policyholders, regulators, media, and consumer advocates, like me, would be critical of its decision, the overwhelming criticism by those in its own industry suggests that the OIR’s view is correct.

In my earlier post, What Is State Farm’s Agenda?, I noted that State Farm could honestly believe a 67% rate increase is necessary. Indeed, just because the Administrative Judge and OIR found differently does not absolutely disprove State Farm’s position. Given the long term implications, Florida should conduct a thorough analysis of State Farm’s motives, agendas, and internal decision making process.

The last thing we need in the long term is to find State Farm had a legitimate point and that all of its competitors are charging rates that are far too low. Rates too low will eventually result in massive bankruptcies of these insurers. I doubt that is the case, but that is the implication of State Farm’s actions. Florida should conduct a complete study.