State Farm plans to stop selling new homeowners' policies
TALLAHASSEE -- July 1, 2002 -- State Farm Florida says it will stop writing new homeowners' policies
in the state beginning today, following state regulators' rejection of its
latest request for a rate increase last week.
The company -- responsible for about a third of Florida's homeowners' insurance policies -- also says it
won't renew 4,800 existing condominium association insurance policies. However,
the insurer's decision will not affect the renewal of current, existing
homeowners' policies or impact its car insurance or life insurance policies.
Late last week, state Insurance Commissioner Tom Gallagher denied State Farm's
request for an average rate increase of 22 percent on its homeowners' policies.
Calling the rate increase request "excessive and unjustified," he
said that the premium increases approved for the company over the past two
years were adequate to cover increased operating expenses. State Fair raised
premiums 6.4 percent last year and 14 percent in January.
State Farm Florida, based in Winter Haven, was also asking for increases in property insurance
rates for condo and apartment building owners that would average about 132
percent statewide, according to the Department of Insurance.
State Farm officials say that its recent rate increases aren't enough to cover
the rising damage claims from sinkholes, water leaks and mold, and rising costs
for building materials. State Farm Florida reported an underwriting loss of $231 million from
January 2001 through last month.
In other insurance news, Allstate company officials recently informed the
Florida Association of Realtors that it's no longer writing homeowners policies
for secondary residences in Florida, including detached single-family homes and
condominiums. Allstate points to an increased number of high-priced claims for
mold damage, a problem exacerbated by the fact that secondary homes are often
occupied by someone other than the owner, according to Carol Barber with
Allstate's Florida Corporate Relations office. Allstate also has asked the
state Department of Insurance for a separate endorsement for mold coverage.