State Farm Plans Its Exit From Florida
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State Farm is one step closer to pulling its property insurance policies out of the state. Florida’s Insurance Commissioner Kevin McCarty indicated the insurance giant should go and soon.
“We do not believe that they can maintain trustworthiness and fitness to continue to do business in Florida.”
This messy exit is due to State Farms’ claims that it is operating close to the red and cannot cover 1.2 million policies if a major hurricane were to hit the state. McCarty says State Farm Florida, the state’s property insurance division, must surrender its license to operate within 30 days.
As for the policy holders, State Farm will be required to help them find private policies and not to throw them into the Florida backed Citizens Insurance pool of last resort. At this point it’s uncertain if Citizens could even keep up with all of the policies it has if disaster was to strike.
However, State Farm wants to stay in Florida in the lucrative auto policy business which serves some 2.8 million customers.
As a final exit plan, State Farm Florida must pro-rate refunds to policyholders, according to McCarty. All of this is not yet a done deal.
State Farm can take the next three weeks to decide whether it can abide by these requirements or not, but it’s apparent that the state would like to get rid of State Farm as much as it wants to leave the state. #