State Farm has lawmakers mad


Published: Thursday, January 29, 2009 at 6:01 a.m.
Last Modified: Thursday, January 29, 2009 at 12:18 a.m.

TALLAHASSEE With the announcement that Florida's largest private property insurer is pulling out of the market, state lawmakers and Gov. Charlie Crist say they are ready to take steps to counter State Farm's move.

Crist wants the Legislature to consider a measure that could block State Farm from selling auto insurance in the state if it leaves the property insurance market. Another measure would prevent State Farm and other insurers from dropping more than 2 percent of their customers in any given year.

The moves come as others warn that State Farm's decision, which could leave more than 1 million customers seeking new coverage, is likely to send many more property owners into the state-backed Citizens Property Insurance Corp.

And with the state now running the largest property insurer in Florida, it increases the potential for a hefty taxpayer bailout or assessments against all policyholders if Florida is struck by a major hurricane in the next few years.

"I'm really sad that it has come to this point," said Rep. Alan Hays, R-Umatilla, vice chairman of the House Insurance, Business and Financial Affairs Policy Committee. "What we need is more competition in Florida, not less. Any time you have a company like State Farm leaving, it tells you how dismal the situation is."

Other lawmakers pointed more of the blame at State Farm, where company officials said they were leaving the state because regulators would not let them raise their premiums enough to remain profitable.

"I'm outraged," said Sen. Mike Fasano, R-New Port Richey, a member of the Senate Banking and Insurance Committee. "They should be ashamed of themselves. It's unconscionable what they have done. They're not losing money."

State Farm's decision irked Crist, who said he would support legislation preventing State Farm from selling auto insurance in Florida if it leaves the property market.

Fasano is sponsoring that measure in the Senate, saying lawmakers tried to pass a similar prohibition in 2007 but it got "watered down" by industry lobbyists.

"This would say to the Allstates, the State Farms and the others who have been collecting premiums from homeowners for years that if you're going to refuse to sell homeowners insurance in the state of Florida, then you can't sell automobile insurance," Fasano said.

Fasano also said he would like to broaden the measure to prevent the companies that have pulled out of the property insurance market from selling other lines of insurance.

Fasano dismissed the company's claims that it was losing money, arguing that State Farm's revenues and profits have to be viewed nationally, not just in the Florida market.

Industry officials said the bill would hurt consumers. "It's going to screw up the auto market," said Sam Miller, a spokesman for the Florida Insurance Council. "It may make you feel like you're doing something for consumers. But what if the company that can't sell auto happens to be company with the cheapest rates?"

Hays said he would oppose the auto ban, saying companies should be given more freedom to operate in Florida.

"Just because a company writes automobile insurance doesn't mean that they should be forced to write property insurance or vice versa," Hays said.

Working with the state Office of Insurance Regulation, Fasano is filing another bill that would prevent companies from dropping more than 2 percent of their customers in any year.

Miller said the industry believes that may be unconstitutional.

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