Fla. Regulator OKs State Farm's Pullout From State

TALLAHASSEE (AP) - Insurance Commissioner Kevin McCarty opened the door Friday for State Farm Florida to withdraw from the state's property insurance market, but only after it meets several stipulations.

McCarty said the sooner State Farm leaves the market, the better.

"Quite frankly, State Farm has been acting in a condition hazardous to the policy holders and hazardous to the people of Florida," McCarty said. "We do not believe that they can maintain trustworthiness and fitness to continue to do business in Florida."

His order stated that State Farm Florida must surrender its license within 30 days, facilitate the orderly transition of policies to the private marketplace and not place any policies with state-backed Citizens Insurance.

"What State Farm is trying to do is hold the people of Florida and their policyholders hostage and we're not going to let them do that," McCarty said. "We're requiring them to use the private sector and not warehouse them in Citizens. Citizens is already overtaxed with the policies that they have."

However, policyholders can continue doing business through existing State Farm agents as long as the replacement contracts are not with Citizens.

"There are a number of insurance companies who are committed to helping Florida's families protect their property and assets," said Alex Sink, the state's chief financial officer.

State Farm plans to continue serving some 2.8 million customers who have their vehicle insurance with them.

McCarty's order also specified that State Farm must pro-rate premium refunds to any policyholder seeking to voluntarily cancel or not renew a policy.

State Farm Florida, a subsidiary of the Illinois-based insurer, said last month it could not continue doing business in Florida's high-risk property market without becoming insolvent.

The company's withdrawal affects roughly 1.2 million Floridians who have policies on their homes, condos and businesses.

"We hope to have further conversations with the OIR (Office of Insurance Regulation) to create an orderly process that is best for our customers, our agents and the marketplace," said Chris Neal, public affairs manager for State Farm Florida.

State Farm has 21 days to review McCarty's order and decide whether to abide by it or request a hearing.

Just last week, top State Farm executives appeared before a House committee to explain their reasons for leaving the state.