The First District Court of Appeal has affirmed the agency denial of State Farm's rate increases sought late last year. The opinion will become final in 15 days, if no motion for rehearing is filed.
“We are very pleased with the District Court’s ruling, said Commissioner McCarty. State Farm knew, or should have known, that the filing it made was contrary to the Legislature’s intent and could not be approved. State Farm’s actions suggest that it intended to use the denial of the filing as a pretext for threatening to withdraw from the Florida Property Insurance Marketplace."
A complete history of the State Farm matter is found at the OIR website.
Just what this decision means for Florida's insurance consumers is uncertain. State Farm represents a well-capitalized insurer in a marketplace where capital should be viewed at a premium. If State Farm does exit Florida, then will that mean less choice for consumers, less solvency in our insurance system, and more of a burden upon the State's insurer, Citizen's? The answer is almost certainly, yes.
Is this another step in the efforts of the major carriers (State Farm, Allstate, Farmers, AIG, Nationwide, and others), to mitigate their Florida risk and assert that rates are too low to stay? Is the recent Surplus Lines Laws passed in 2009 a back entrance into the Florida market without the administrative limitations on coverage forms and rates? Will major carriers exiting through the front door re-enter as their surplus lines subsidiaries via this back door? The answers are almost certainly yes.
Regulators must be wary of allowing the established well-capitalized insurers to avoid the risk of Florida's marketplace, yet be in a position to reap the rewards clothed in the sheepskin of surplus lines coverage.
Stay tuned.
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