PDA

View Full Version : Wow! State Farm to exit Fla. homeowner insurance


Monte
01-27-2009, 02:24 PM
This is BIG BIG news... Not good at all..

http://money.cnn.com/2009/01/27/news/companies/florida_insurance/index.htm?postversion=2009012713

MIAMI, Florida (CNN) -- Florida's largest private insurer is pulling the plug on homeowners' policies in the state, citing the losses suffered since the brutal 2004 hurricane season.

The decision by State Farm Florida comes two weeks after state insurance regulators rejected the company's request to raise rates by more than 47%. The decision means State Farm Florida - a subsidiary of national insurance giant State Farm Mutual - will no longer renew policies for its roughly 1.2 million customers in the Sunshine State.

"This is not an action we wanted to take, but one we must take given the realities of the Florida property insurance market," company President Jim Thompson said in a statement announcing the decision.

The company said it has paid out $1.21 in claims for every dollar of premiums it has collected since 2000 and suffered billions in losses after the 2004 hurricane season, when four major storms hit the state. And it said its net worth had dropped by nearly 25% since 2006 even with no major disasters.

"This is not something any business can afford to do," Thompson said.

Step requires state approval
Company spokeswoman Michal Connolly said the announcement is the first step in a two-year process that will require the approval of state regulators.

In a statement issued after the decision, Florida Insurance Commissioner Kevin McCarty said the company had warned that a withdrawal from the homeowners' market was possible when it was seeking a rate increase. He said his office had 90 days to approve the company's plans.

"I will do everything within my power to protect Florida consumers from unnecessary destabilization of the insurance market that this might cause and to ensure that Florida consumers are protected and have access to insurance at rates that are not excessive or unfairly discriminatory," McCarty said.

State Farm Florida was set up as a separate entity in 1998 to address what the company called the "unique risks" of doing business in Florida. It said it had to borrow $750 million from its parent company after 2004, and has been unable to pay that money back.

Florida's largest insurer overall is the state-run, nonprofit Citizens Property Insurance company, established in 2002 to offer coverage in cases where private insurers won't write policies.

ttu
01-27-2009, 02:30 PM
that is huge news.

Monte
01-27-2009, 02:40 PM
The commission will HAVE to let them change their rates. I wonder if State Farm is pulling a power play. There is no way in hell that the state can give up that big of an insurer..

duckguy
01-27-2009, 03:19 PM
Either way that is bad news for any policy holders or proposed insureds

MYMC
01-27-2009, 03:20 PM
The news just gets better and better

flipper
01-27-2009, 03:23 PM
See, now if we all bought brand new boats, we'd pay more insurance and they'd be fine

Maristar210
01-27-2009, 03:30 PM
They probably own a bunch of '04 boats so who cares... :rolleyes:

RexDog1
01-27-2009, 03:36 PM
My best friend is an AllState Insurance broker, and last year they stopped selling homeowner’s insurance policy because AllState had to big of the home market in Calf. Back in the early 90’s when 20th Century pulled out of California home market………….. It is going to get ugly for the next few years ……………………………..:o

ttu
01-27-2009, 03:40 PM
My best friend is an AllState Insurance broker, and last year they stopped selling homeowner’s insurance policy because AllState had to big of the home market in Calf. Back in the early 90’s when 20th Century pulled out of California home market………….. It is going to get ugly for the next few years ……………………………..:o

st farm did the same thing here in oklahoma about 5 years ago. after 2 years they started back up but at a much slower pace due to the restrictions they started to enforce.

Upper Michigan Prostar190
01-27-2009, 04:09 PM
Imagine what this is going to do to property values.......

I vacationed in FL in 2005 and 2007, and when we went in 2007, there were TONS of places for sale. we started talking to locals about it, and they said the insurance costs got SO high after the hurricane that people just didnt want to pay it or couldnt afford to pay it anymore. we are talkin everything from your basic hut, right up to 5 mil homes. Dang. Even the rich folks wanted to sell at a loss. Property values were significantly lower in 2007 than in 2005.

I am sure news like this wont help things. the remaining companies that still insure arent going to do it for cheap when a big dog like that pulls out of town.

6ballsisall
01-27-2009, 04:15 PM
They probably own a bunch of '04 boats so who cares... :rolleyes:

I see a surge in 09 MC's taking place in Florida very soon. :rolleyes:8p

wakeX2wake
01-27-2009, 04:15 PM
Imagine what this is going to do to property values.......

I vacationed in FL in 2005 and 2007, and when we went in 2007, there were TONS of places for sale. we started talking to locals about it, and they said the insurance costs got SO high after the hurricane that people just didnt want to pay it or couldnt afford to pay it anymore. we are talkin everything from your basic hut, right up to 5 mil homes. Dang. Even the rich folks wanted to sell at a loss. Property values were significantly lower in 2007 than in 2005.

I am sure news like this wont help things. the remaining companies that still insure arent going to do it for cheap when a big dog like that pulls out of town.

oddly enough that phenomenon is having an opposite effect for property values on lake property in this area of the country... after the 04 hurricane season property values on Lewis Smith Lake and many other lakes here in Alabama more than doubled... it seemed like everyone who had vacation property in the popular towns along the coast were all looking for inland vacation property... granted most people wouldn't consider "going to the lake" as a vacation but i'd take it over the beach any day of the week and if you couple that w/ ridiculous property prices in the coastal areas and insane (but absolutely mandatory) insurance rates they drove my dream of buying a lake house right out of college into the ground

a girl i dated in college's parents took the insurance money and sold a flattened place near panama city and sold the lot the house had been on and bought lake property... her dad was thrilled about it b/c he no longer had to go down and board up windows and all that jazz... all he had to do was make sure pipes didn't freeze in the winter... the mom wasn't as thrilled but she didn't really care as long as her and the daughters had a place to lay out

TX.X-30 fan
01-27-2009, 04:18 PM
Did the same in texas and came back. For sh!t company. I had them for 10 years no claims and they wanted to triple my home insurance at the mold time. Found better for what I was paying.

450hp@bellsouth.net
01-27-2009, 04:52 PM
This is exactly what happens when government gets involved. Florida state government tries to cap rates and the insurance company can't make a profit. Florida residents choose to live in a high risk location and they should pay the market rates for insurance. No way folks in Georgia should supplement Florida insurance risk. No way people in Florida should supplement flood insurance for people who choose to live in New Orleans.

Got to pay extra to live in areas the actuaries determine higher risk. Too bad health insurance is is not treated the same way. Fat people should pay more!!

trickskier
01-27-2009, 04:58 PM
My Home Owner Insurance has more than doubled since 2004! :o

My deductible is $500.................Until a Hurricane is formed.............Then it is 2% of the stated value of the house!!!

Monte
01-27-2009, 05:12 PM
Either way that is bad news for any policy holders or proposed insureds

I would rather have some coverage at some price than no coverage at any price. It is very bad news for the policy holders. The proposed insureds are just out of luck now it seems.

trickskier
01-27-2009, 05:28 PM
I would rather have some coverage at some price than no coverage at any price. It is very bad news for the policy holders. The proposed insureds are just out of luck now it seems.

No, they can get insurance through Citizens which is State owned and very expensive!!!

Note: Central & South Florida Rates are the most expensive rates because of exposure.

JohnE
01-27-2009, 05:40 PM
Tricky, what do you pay per year for HO ins? I pay maybe $800 for mine.

trickskier
01-27-2009, 05:41 PM
Tricky, what do you pay per year for HO ins? I pay maybe $800 for mine.

Home Owners $1,800.................I was paying around $800 prior to 2004.

TX.X-30 fan
01-27-2009, 05:50 PM
When I left the Houston area mine has dropped 50%.

TX.X-30 fan
01-27-2009, 05:53 PM
That does not sound bad Trick, I was thinking 5/6 grand for Florida. I know it depends on value but my bro-in-law pays more than you south of houston 145,000 house.

trickskier
01-27-2009, 06:03 PM
That does not sound bad Trick, I was thinking 5/6 grand for Florida. I know it depends on value but my bro-in-law pays more than you south of houston 145,000 house.
Not until you consider a 2% deductible on the stated value. So a house that's worth $800K has a $16K deductible if damaged during a Hurricane. That's what hurts!!!

shepherd
01-27-2009, 06:06 PM
47% increase? Sounds like BS to me. They have one bad year...
Another case of the Man trying to put us brothers down. :mad:

Monte
01-27-2009, 06:11 PM
No, they can get insurance through Citizens which is State owned and very expensive!!!

Note: Central & South Florida Rates are the most expensive rates because of exposure.

I hate to tell you Trick, but that is a pool, collectively all insurance companies in the state pour the reserves into. If State Farm pulls out, the pool just got really shallow. Guess who has to pour the money in to make that pool deep again. Yep the other insurance companies. Guess how they do that.. Your carrier has to increase its rates because the state has to make sure it can cover its exposure:o Those premiums although high are not a drop in the bucket as to what is needed in the catastrophy reserves which your company pays into just like you pay auto/ homeowners premiums. The more exposure they have to absorb from this mess, the more the state will need in reserves.. There is a nasty cycle about to happen.:o

School Skier
01-27-2009, 06:14 PM
I think State Farm was in trouble in California too from back in the 90s.

trickskier
01-27-2009, 06:16 PM
I hate to tell you Trick, but that is a pool, collectively all insurance companies in the state pour the reserves into. If State Farm pulls out, the pool just got really shallow. Guess who has to pour the money in to make that pool deep again. Yep the other insurance companies. Guess how they do that.. Your carrier has to increase its rates because the state has to make sure it can cover its exposure:o Those premiums although high are not a drop in the bucket as to what is needed in the catastrophy reserves which your company pays into just like you pay auto/ homeowners premiums. The more exposure they have to absorb from this mess, the more the state will need in reserves.. There is a nasty cycle about to happen.:o

Citizens Property Insurance Corporation is the State's homeowners' insurance safety net. It was created by the Legislature in 2002 to offer property coverage to Floridians without private insurance options. We pay an additional 4% on top of our Premiums to fund Citizens............:mad:

trickskier
01-27-2009, 06:23 PM
I think State Farm was in trouble in California too from back in the 90s.

Hurricanes - FL and Earthquakes - CA................Two States with a lot of Natural Disasters!!!

Monte
01-27-2009, 06:25 PM
Citizens Property Insurance Corporation is the State's homeowners' insurance safety net. It was created by the Legislature in 2002 to offer property coverage to Floridians without private insurance options. We pay an additional 4% on top of our Premiums to fund Citizens............:mad:

If it is any cosollation, We have the North Carolina Joint Underwriters Assoc. It operates the exact same way:rolleyes:

trickskier
01-27-2009, 06:29 PM
If it is any cosollation, We have the North Carolina Joint Underwriters Assoc. It operates the exact same way:rolleyes:

I just hope the insurance company I'm with doesn't pull out!!!

Slinkyredfoot
01-27-2009, 07:09 PM
Not until you consider a 2% deductible on the stated value. So a house that's worth $800K has a $16K deductible if damaged during a Hurricane. That's what hurts!!!


After being with State Farm for over 15 years with no claims and a $500 deductable.... the bumbs whacked me with a 2% deductable after a two year span in which we lost a big tree that did some damage and had a lightnig strike with minor damage, turned both claims and said they would cancel me unless I went the 2% route...After the hail storm a couple of years ago I ended up footin' that tab.

Seems like such an unjust rip off to the average insurance paying Anglo Saxon, American white boy....

trickskier
01-27-2009, 07:45 PM
After being with State Farm for over 15 years with no claims and a $500 deductable.... the bumbs whacked me with a 2% deductable after a two year span in which we lost a big tree that did some damage and had a lightnig strike with minor damage, turned both claims and said they would cancel me unless I went the 2% route...After the hail storm a couple of years ago I ended up footin' that tab.

Seems like such an unjust rip off to the average insurance paying Anglo Saxon, American white boy....

I agree!!! :mad:

atlfootr
01-27-2009, 07:45 PM
I just hope the insurance company I'm with doesn't pull out!!!
Here's what my agent told, me ....

Your policy is good thru the year but State Farm did submit a request to the Office of Insurance Regulation to discontinue homeowner coverage. It will take 90 days for A response and we don't know what that will be and then even a longer time line until a policy could be non-renewed as you have to give at least 180 day notification.

In the mean time I am contacting my local legislators and asking them to please find a viable solution to the insurance crisis in Florida...and there really is one. I hope that legislation is passed during this year's session that will bring a reasonable solution to the problem and State Farm will not have to go forward with this action.

trickskier
01-27-2009, 07:47 PM
Here's what my agent told, me ....

Your policy is good thru the year but State Farm did submit a request to the Office of Insurance Regulation to discontinue homeowner coverage. It will take 90 days for A response and we don't know what that will be and then even a longer time line until a policy could be non-renewed as you have to give at least 180 day notification.

In the mean time I am contacting my local legislators and asking them to please find a viable solution to the insurance crisis in Florida...and there really is one. I hope that legislation is passed during this year's session that will bring a reasonable solution to the problem and State Farm will not have to go forward with this action.

That stinks!!! Good Luck!!!

JohnE
01-27-2009, 08:43 PM
HI insurance here is voluntary. Meaning a company can drop you at any time. Typically what happens here is you pay your premiums like a good boy or girl for a long time. Then something happens and you make a claim. Legit claim. No scam. MO is then insurance company pays the claim then drops your coverage. Legal and happens all the time.

Slinkyredfoot
01-27-2009, 09:16 PM
HI insurance here is voluntary. Meaning a company can drop you at any time. Typically what happens here is you pay your premiums like a good boy or girl for a long time. Then something happens and you make a claim. Legit claim. No scam. MO is then insurance company pays the claim then drops your coverage. Legal and happens all the time.

Well it still sucks and its an outrage...somebody write Obama, I would but I know he would not accept my mail...

Monte
01-27-2009, 09:18 PM
Well it still sucks and its an outrage...somebody write Obama, I would but I know he would not accept my mail...

He can read your mail from inside your head Slinky;) Remember HE is something else:rolleyes::noface: