TALLAHASSEE, FL--After State Farm filed for a 47% rate hike, Governor Charlie Crist said it would be handled appropriately.
“I think you know what I mean by that—rejecting it,” the governor said at the time.
After it was turned down, State Farm said it was dropping all 800,000 of its homeowners policies.
The Governor again said good riddance; “I think that Floridians will be much better off without them.”
But the state and State Farm have yet to agree on how the company will leave Florida. The sticking point is who would pick up the policies. Insiders say there aren’t enough private insurers to handle the avalanche.
“A lot of those policies would have to go to Citizens because the private insurance companies are still too few in number, we think, to pick up all those policies,” said William Stander with the Property & Casualty Insurance Association.
And growing the state-run insurer is not something the state can afford, financially or politically.
Regulators and State Farm have agreed twice to delay the trial over the company leaving.
Three people with knowledge of the negotiations say State Farm is being offered rate hikes in the neighborhood of 15% for two years running and an end to costly hurricane mitigation credits. In exchange the company would keep about half its policies.
Sam Miller of the Florida Insurance Council says keeping State Farm would be good news. “To have a company, a giant like State Farm, no longer participate in Florida, that’s not good for the market.”
A State Farm spokesman said it would be inappropriate to comment until an agreement is reached.
Some insiders believe State Farm capitulating to the state would make it hard for other companies to negotiate with the state in the future.
The state has consistently said customers will have at least six months notice before a State Farm policy is canceled.
