With the 2004 and 2005 hurricanes inflicting sizable damage in Florida, insurance company State Farm Florida was acclaimed for its rapid turnaround time on claims, and fair disbursements. After this though, and following an infusion of funds from its parent company, State Farm Florida was wrestling with over twenty million dollars in losses every month. As one of the last remaining large home insurance companies, besides Allstate Floridian and Nationwide Florida (companies with their own problems post 2005); State Farm Florida has over 700,000 home, property, boat and other related insurance policies in place.
Insurance catastrophe
State Farm Florida company President Jim Thompson besides other senior executives met with authorities in the wake of a recent 47% rate increase sought by the company (which was turned down by the state) to discuss and disclose time bound plan to put an end to renewals of policies and to stop issuing policies over a two year period. State Governor Charlie Crist, made his indignation clear and pointed out that it was the responsibility of the corporate to behave in an honorable manner. Spokesperson, Chris Neal of State Farm Florida concurrently clarified, that following publicly available communication from Florida Hurricane Catastrophe Fund stating that it would be incapable to meet reinsurance obligations to insurance companies in an efficient manner; and, without the rate hike, it would be prohibitive for State Farm Florida to stay solvent. In this scenario, Florida state insurance regulators would have had to commence delinquency proceedings to liquidate the company by 2010. Such a scenario would hurt policy holders and stakeholder in a more adverse manner than simply curbing renewal of policies.
Why the struggle?
Other than the state run Citizens Property Insurance Corporation, there seem to be limited options available for the current; and, soon to be insurance seekers in Florida. The state run corporation is heavily underfunded and has a particularly large deficit budget. Where premiums are concerned, there is also a fear about paying anywhere between 90% to 200% higher premiums than customers have been at home with paying State Farm Florida, which has one of the lowest premium rates around. Either way, by way of winding down or through insolvency, State Farm Florida would not be able to remain functioning. This being a definite, its customers would be well advised to begin looking out for alternate insurers through whom to insure their properties. Current regulations require an insurer to provide ninety days of advance notice to customers, advising them that their policies will not be renewed. A number of smaller companies, untested by the disasters of 2005, have entered the Florida market since, and would be gunning for all the new business. Current State Farm Florida should go ahead and initiate their search for dependable home and property insurers.
Insurance companies doing business only in Florida, find a ready market
The most rapid way to locate a number of agents in your area would be to pick up your phone and call directory assistance for leads. Next, maximize your reach, by pooling in your research with that of friends and family who want to find insurance in a hurry. Forming a group would also help you negotiate for better deals for individual policies for each member of your group. Companies like American Strategic and Universal Property & Casualty have done well over the last few years and actually made a profit through the disasters of 2004 and 2005 – so appraise these and other small companies.