State Farm Agents To Suffer From Homeowners Insurance Pullout

Ed Normand — Wed, 28 Jan 2009 21:55:45 GMT

Yesterday, State Farm announced it will cease selling property insurance in Florida. This will require about 1.2 million State Farm insureds to find other coverage. It will also result in State Farm agents losing millions in premium revenue and income.

State Farm Agents are members of the local community. They obtain coverage areas where they are authorized to bear the State Farm banner and do business. They are instructed to market as a company that serves all the needs of its insureds, especially Homeowners coverage. In fact, the foundation of the company is Homeowners coverage, from back in the day when it insured the farm and home. State Farm agents cannot sell outside lines of insurance like independent agents. Thus, unlike say, a Nationwide agent, the State Farm agent cannot just locate outside insurance coveragefor its customer and be the agent for Homeowners Insurance purchased from the outside company.

The decision by State Farm to drop Homeowners coverage in the State stems from its latest failure to convince Florida Officials to allow it to raise rates by 47 percent. State Farm claims it cannot afford to do further Homeowners business in the State after legislation in Florida rolled back rates to 2006 levels. Insurance companies have been seeking rate increases and some have been reducing coverage ever since. The State Farm statewide cancellation is unprecedented. One just hopes the State Farm agents can weather the storm. The way they are being treated it is no wonder insurance agents like State Farm agents are known by the term "captive agents".

Originally posted at InjuryBoard by Ed Normand

State Farm Threatens to Leave Florida

Ed Normand — Tue, 27 Jan 2009 21:37:36 GMT

State Farm Insurance Company has been trying for a long time to get the State to allow it to raise rates for homeowners insurance. Now they are trying something new--threats. Like a child who does not get to play with the toy he wants State Farm is threatening to leave Florida. Surprisingly, Governor Charlie Crist, instead of cowing to them seems to be calling State Farm's bluff:

"They probably charge about the highest rates in the state anyway," Gov. Charlie Crist told reporters. "I think Floridians will be much better off without them."

State Farm intends to get rid of all lines of property and casualty insurance in Florida to include homeowners, renters, condominium, boat owners and umbrella insurance coverage. Of course, State Farm is keeping its high profit auto insurance coverage in Florida. State Farm already refuses to write new homeowners coverage in Florida. To limit its parent company liability State Farm created and transferred all Florida policies to State Farm Florida in 1998 as a stand-alone subsidiary of State Farm Mutual Automobile Insurance Co. The obvious plan then was to limit exposure of the company as a whole in case a big storm hit Florida again. Now that they are refusing to write new coverage, have created a shell company to limit liability and have not been able to bully the State to raise prices they are threatening to leave. They are abandoning 703,000 insured policy holders in Florida, many of whom have been with State Farm for decades. One suggestion to all those policy holders: drop your auto coverage with State Farm. Do not let them take the cream of the insurance business but leave all those loyal policy holders out in the cold. Not very good neighborly.

Originally posted at InjuryBoard by Ed Normand

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State Farm Agents To Suffer From Homeowners Insurance Pullout

State Farm Threatens to Leave Florida