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They were lobbying for an increased cap on premiums I think. Somewhere around a 58% increase last time I heard. Did that measure fail? Is that why they're pulling out now?

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IF they bail on homes they should not let them write any new policies period. I dropped them 3 years ago when my homeowners went from $2,200 to $8,900 in one year.

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What do you expect?  You expect them to lose money?

The state government won't let them raise rates.

If they were making a profit, do you actually think they would want to leave?

Put on your thinking caps and lay down the crying towels.

Contact your state reps and your state senators.  If they let the free market operate, at least we will have some choices.

If the state keeps going like its going - we will end up with Citizen's as the only choice.

And that ain't much of a choice.

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I don't believe for one minute that they are not making a good profit. They funnel the profit to the mother Company and claim poor mouth. Professionals reviewed their demand to raise rates an saw they were profiting.  This is a baby throwing a tantrum and nothing more. This will backfire in their faces when they lose the market share of auto insurance business.

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Pure emotion and no facts.

The "professionals" who denied their rate increase were political hacks.

And they certainly know they will lose market share in auto as a result.

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IF they bail on homes they should not let them write any new policies period.

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I love saying "I told you so"....

Don't worry about the auto business, a new state statute will see to it they aren't in the Florida auto market in the future.  I do not however expect the statute to survive a dedicated judicial challenge.

They aren't funneling profits to the home office in Illinois though.  The Florida property company was separated from "mother mutual" after the last bad run of hurricanes.  They weren't going to let Florida storms tank the company.

It is going to get far worse with insurance company reserves falling with the stock market too.

Screwing with the insurance market was the dumbest thing the legislature ever let Crist talk them into.

Oh, I retired from the insurance business December 2007, so nobody can call me an industry hack this time.  

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Those hacks were actually trying to protect us this time.  Rates in Florida are waaaay inflated.  So they didn't make a profit for a year or two, that's business.  It will bounce back.  I wouldn't give them my biz now if they offered insurance for free.  Screw em.

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Great.  Now we'll all get stuck with Citizens.  I'm going to pull all my coverage with them.  If I have to find a new company for Homeowners, I'm going to find one for flood and Auto.

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If you are insured with State Farm....  even if you aren't.... contact your state legislators and tell them to let insurance companies have rate increases....

At least people will have the choice about whether or not they want to keep their company, or go to Citizen's.

The reason that the politicos like Crist make these decisions is because they believe irrational people will get emotional and blame insurance companies.... you know, like in this thread.

If enough RATIONAL people, who believe in capitalism and free markets, tell the politicians that they are making laws and rules that diminish our choices and we don't like it....  then maybe they will change their tune.

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Florida can't afford $10,000+  a homestead insurance right now. If you hadn't noticed there is a reccesion going on / soon to be depression. And if you hadn't noticed there are no other insurance corps jumping at the chance to insure Florida. Send state farm packing. When we don't have home insurance, well the banks will just have to deal with it. Most of the time they are already cheaper then citizens and state farm. So be it.

Statement by Scott Wallace, President, CEO and Executive Director of Citizens on State Farm Plan

"Citizens Property Insurance Corporation will closely monitor the progress of State Farm's request, filed with the Office of Insurance Regulation, to cease writing property insurance in Florida and to non-renew its existing property insurance policyholders. We will work with the Office and other interested parties to facilitate a smooth transition of as many of these policies as possible to the voluntary market."

"This plan, if approved by the Office, calls for a two year non-renewal process for all current State Farm property insurance policyholders. As Commissioner McCarty noted in his statement, there are many companies currently writing property insurance throughout Florida. It is our hope that a majority of State Farm's policies will be absorbed by the private market as offers for private coverage are made over the two-year period."

"We urge State Farm customers to shop for coverage with local agents who represent other companies. If coverage cannot be found, State Farm customers may contact the Florida Market Assistance Plan (FMAP) at www.fmap.org or by calling (800) 524-9023. FMAP helps consumers find coverage with agents that represent carriers actively writing in Florida. For those who are unable to find coverage in the private market, Citizens will be there."

Statement by Fla. Insurance Commissioner on State Farm Plan to Stop Offering All Property Insurance

"Although this is disappointing news for Floridians, who have been loyal customers of State Farm, we are not surprised by State Farm's decision to stop offering all property insurance in Florida.

"We have been hearing for months of possible plans to make such a move in Florida, including a document submitted to the Office as recently as Dec. 5 as part of their recoupment filing that showed an anticipated reduction to 655,000 HO policies by 2010.

"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.

"I will do everything within my power to protect Florida consumers from unnecessary destabilization of the insurance market that this might cause and to ensure that Florida consumers are protected and have access to insurance at rates that are not excessive or unfairly discriminatory.

"It is important to note that we have been working with state Sen. Mike Fasano, R-New Port Richey, to develop legislation that will significantly limit the number of non-renewals a company can issue in a year.

"To help ease the transition of policies, Florida already has new companies who are eagerly looking to grow their businesses and will welcome the opportunity to add more customers. 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.

"It also is important that State Farm customers understand that the Office must first approve State Farm’s plan. The Office has 90 days to do that; and State Farm must then provide 180 days notice to customers before any policies can be non-renewed."

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They were trying to make political hay.

There is a reason that the STATE run insurance company has become the largest insurer of homes in Florida.

The politicians have been messing up the insurance market for years.  Every policy you have has a surcharge on it because Citizens wasn't charging enough back when the storms hit in 04 and 05.  And then, they REDUCED the rates that were already too low.  Now, they are finally going to raise the rates, but they will still be too low.  And when the next storm hits, look for the biggest tax increase in FL history.

Free markets work.

Socialism fails.

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+1.  They should just be banned from ever doing any business in this state.

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So they are dropping every policy in FL? I just renewed, my bill has gone down $500 over the last two years, I haven't gotten any sort of notice.

The Gov said if they pulled this, they wouldn't be allowed to write auto insurance in FL.

ETA: Are they just going to stop writing new policies or are they going to dump every homeowners policy, in FL, they currently hold?

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I don't do State Farm. Never have, never will. Good riddens.

They aren't funneling profits to the home office in Illinois though.  The Florida property company was separated from "mother mutual" after the last bad run of hurricanes.  They weren't going to let Florida storms tank the company.

State Farm Florida, the state's biggest private property insurer with about 1-million policyholders, reported a profit of $134-million in 2006. Its loss ratio, meanwhile, was less than 33 percent.

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Here is some data to make you think...

http://www.sptimes.com/2007/03/18/Business/Premium_profits_for_i.shtml





This a a 33% underwriting loss ratio. Auto insurance companies usually average more like a 90 to 95% ULR. This means they pay out 90-95% of every dollar of premiums out on claims and business expenses. The auto companies are doing well. 33% is great and they are crying like babies. It is a game they are playing, nothing more and a very bad one in thi economic climate.

Notice the BS about the loan from the mother ship. It is their own fault that they did not reserve enough money for a catastrophic loss. Notice the interest BS comment.


67% profit is very good that does not include what they make off their investments and other lines of insurance they sell.

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It isn't a game.....tell me what their probable loss is on a 40 year hurricane event and get back to us.
When you do that, calculate just how many years of 33% losses it's going to take to cover that one event.  Don't forget these judges and courts that are ruling that these companies are paying for flood losses not covered under any Homeowners policy like the screwing they took in Mississippi, Louisiana, and Alabama.  If you knew jack shit about the property market you would understand that a profit of $134 million in the state of Florida would only pay for 536 homes at an average value of $250,000.  Oh, and those are pre-tax figures.  

Where the hell do you think reserves come from?  That money comes from years of 33% losses so they can place it in reserves.  After they are raped by Federal taxes on that profit, they are going to be able to bank maybe 35-40% of the remaining pre-tax profit.  "Their own fault that they did not reserve enough money", Jesus, you reckon these companies put their capital at risk for some dumbass bureaucrat to steal it?  Just where would this big-ass pile of money come from to reserve?  In a state where the regulatory climate is such that you are going to lose it all in every storm?  Yeah, just keep throwing money in reserves to lose in every successive storm without any hope of getting it back to pre storm levels.

Also, you can bet your ass State Farm has separated from the Illinois Mutual entity for property coverage.  They still share ties in the auto market, but property has been severed quite a few years ago.  Why in the hell would a company take auto profits and those from other lines of business to subsidize cheap Homeowners coverage?  Eventually, those funds being used to subsidize rates will find them under-reserved in the auto lines and they will have to raise auto rates to compensate.  Well, they would if they could, but OIR won't let them do that either.  

The CEO deserved a raise for getting State Farm the hell outta this mess that is the Florida market.  

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Nope, I retired from another Florida market insurer in 2007.  Auto reserves are a joke in comparison to property reserves.  If your company doesn't have problems reserving for cat losses, they have had PLENTY of low loss years to bank it.  If your company is auto lines only, well auto losses in hurricanes pale in comparison to property.  SF isn't playing games, I am well aware of my prior company's probable losses and they don't have 8% of the market share SF does.  It is dog eat dog trying to get enough capacity in reinsurance and keep reserves up to a level acceptable to DOI and OIR.  

So tell us, what was SF's UW loss from 2004-2005?  I can tell you the company I worked for had an UW loss of 178 million the year of the mega hurricanes.  We are approximately 1/12th SF's size.  So just how fast is that 134 million pre-tax profit gonna go?  I have seen the actual losses, and the projected losses, SF is smart to get out.

I've been in Tallahassee dealing with dumbass legislators more times than I can count.  This Crist administration has brought in the ostritches who have their heads in the sand in denial.  I am happy as hell I will never have to sit in on another rate filing and deal with those schmucks.  The Florida market has quickly became a monster the giants of this industry are walking away from.  

In the end, SF is doing the responsible thing.  They are leaving before a Katrina sized storm hits and they don't have enough money in reserve to pay all the claims with the profit they are making in this market.


 

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Banditman, I would be interested in knowing what company you work for.

As Burney pointed out, State Farm is not willing nor should they subsidize the coastal exposure in Fl. They(State Farm) have employed some radical changes to their mode of operation in South MS also. No one would argue that SF has been highly profitable and sucessfull, but how do you think the people in Idaho feel about a portion of the premium they are paying going towards offsetting hurricane claims in FL. The reality of a free marketplace is that State Farm and/or any other company that writes business in a catastrophe prone area has to spread that risk to it's policyholders in other parts of the country. Sounds OK...right? That's how insurance is supposed to work, right? The problem develops when SF or that other company is trying to compete against a regional company in a non-cat exposed area, they can't! They have to charge a price that reflects the total exposure of the company. So SF penalizes itself as it tries to compete in other areas. That means that they can't write as much business in the low hazard areas to prop up the cost of doing business in FL(or MS).

Not knowing who you work for or are referring to as being able to "reserve" for the next hurricane, I can only assume it is one of the companies like Homeowner's Choice which has been formed for the sole purpose of insuring FL homeowners. These companies have a much different mode of operation that that of a national carrier like SF, but if you think ANY of these new upstarts have enough reserves to deal with the like of another Andrew or a Katrina you are mistaken. What they do have is the ability to purchase reinsurance at a reasonable cost in the present marketplace. The reinsurance business is a highly cyclical business and subject to world capital markets and the latest catastrophe. Should we experience another 9-11, Katrina, Andrew, another "correction" of the world economy, devaluation of our currency from the current "bail out the world" mentality and the cost or availability of reinsurance is affected just a little...many of these companies will be insolvent or have to raise their premium to cover the reinsurance cost.

FWIW, State Farm lost 25% of it net worth(surplus) as a result of Andrew. If you work for or know anything about insurance you know that they are regulated based on having an acceptable ratio of surplus to premium writings(those ratios are determined by regulators and ratings agencies such as AM Best and NOT the insurance company). So....when they lose surplus, they HAVE to either increase premiums or decrease the amount of business they write to maintain those ratios.

For the record, I have been an independent insurance agent on the MS coast for 30 years and have dealt with this issue my entire career. It's kinda funny/ironic that FL is finally having to deal with issues we have been dealing with here in MS for 25 years!

If they leave how will they pay off that imaginary 750 million loan? Come on tell me!

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Of course I will, Mother Mutual lent SF'd newly incorporated Florida entity 750 million to capitalize them to do business commiserate with the risk they have here in Florida.  This was the MINIMUM amount necessary to have in reserves for their probable losses in hurricanes.  They made this new Florida company separate so they wouldn't lose 25% of their TOTAL RESERVES like they did in Andrew.

This 750 million will be returned exactly where it came from.  Getting three quarters of a BILLION dollars back makes a helluva lot more sense than losing it all in the next storm.

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If you go back and read my posts you will see that I am against red lining.

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[homer simpson] DOH! [/homer simpson]

They need to pay it back before a storm wipes that 750 million out.  The state regulators have made it abundantly clear that they are not going to allow SF to reach rate adequacy.  In other words, no way is SF going to make enough money to build an adequate resereve to do business in this state for
the rates they are charging.  

If you invested in a business and it came to pass you realized that you were not going to get a fair rate of return on your investment and your broker offered you your money back, would you take him up on the offer?  In this situation, the broker's offer expires on the occurrence of a hurricane.

It won't help your company if they leave.  They will have to come up with enough reserves to carry all the new business; otherwise the state regulators won't allow them to take on the business in the first place.  See, that's the Citizens' plan and that plan is only allowed for the state government.

And though State Farm Florida reported a surplus of $718.9-million in 2006, Neal said that figure included a loan of $750-million from its parent company after the subsidiary had massive losses in 2004

Then why do they need to pay it back now? See they are playing games. What you do not seem to realize that It would help my company if they leave and I don't want them to leave because it will cause problems for others.