Florida Homeowners Insurance Carrier Update
In a long battle with the Florida homeowners insurance regulatory body, the Office of Insurance Regulation, State Farm Insurance has announced that it has reached a settlement with that office with respect to the operations of State Farm Florida, a subsidiary company of State Farm Insurance Company. The settlement involves compromises that will allow the company to increase the rates that are charged to customers for homeowner’s insurance across Florida. The agreement is memorialized in a document called a Consent Order outlining its terms. To learn more about this story, along with other Florida Insurance news, visit www.PremierHomeownersInsurance.com.
Insurers across the State of Florida are experiencing tough times and over half of the property and casualty insurers within the state are losing money according to State Farm Insurance. In the past year, four insurers were placed into receivership, which is similar to a bankruptcy process where a trustee is appointed to handle the company’s assets. This process is tantamount to reorganization under bankruptcy laws and is the most common way that insurance company failures are handled.
The State of Florida maintains a safety mechanism for situations where private insurance companies can no longer remain viable or solvent. That safety net consists of the state run Citizens Property Casualty Insurance, however this organization is also experiencing severe financial troubles. In order to stabilize the company, a rate increase for that Citizens Insurance had also been approved by the Office of Insurance Regulation. Many lawmakers had hoped for an increase of 10 percent, but the actual average increase across the state for policyholders of Citizens Insurance amounted to about 5.2 percent. Many argue that this will not be enough to fund the company adequately to handle a severe hurricane season.
In January of 2009, State Farm Florida announced that it would not be renewing any policies within the State of Florida, citing imminent insolvency if it were to continue. As part of the new agreement, about 15 percent of policies will still be cancelled, but the loss of this business does not affect the State Farm Florida’s standing as the largest property casualty insurer within the state.
The cancellation of policies will affect over one hundred thousand customers, who will receive an advance notice of their cancellation 6 months before the end of their regular policy term. Those customers will have to seek replacement policies from other insurers that are licensed to do business in the State of Florida.
As part of the agreement, the State Farm Florida will raise its rates by about 15%. This will affect all remaining customers, and the change will take effect as each policy reaches its renewal date. Those customers affected by this rate change will have the option of seeking coverage elsewhere, or modifying their existing coverage in order to obtain a lower rate. Very often, policyholders will resort to maintaining a higher deductible, or lowering the limits on their coverage. In some unfortunate cases, coverage will be eliminated altogether, leaving some homeowners without coverage. Those with mortgages may find that their mortgage company will force a policy in place and that homeowner will be billed for the premium, which can often be much more costly than a typical homeowner’s insurance policy. Get more on this story today at our Homeowners Insurance BLOG, http://www.premierhomeownersinsurance.com/homeowners-insurance/blog/
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