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State Farm to OIR: You Can’t Stop Us

March 6th, 2009 by flanews

State Farm Insurance is objecting to the states order allowing the company to stop selling homeowners insurance in the state. In a 76 page response filed late this afternoon, State Farm says the state cannot force the company to allow its agents to write homeowners from other companies, nor can it prohibit State Farm from putting policies in Citizens. Both were key concessions sought by the state in allowing the company to stop doing business. The state has 15 days to respond.

Meanwhile, State lawmakers are asking the Office of Insurance Regulation why more wasnt done to keep State Farm from leaving Florida. Regulators say State Farms 47 percent rate hike request was just too high. As Whitney Ray tells us, the insurance industry says the state needs to reconsider its tough stance on rate hikes to keep companies in the state.

Last year, State Farm asked regulators for a 47 percent rate hike for financial protection against a huge storm. The Office of Insurance Regulation didnt bite. Now 1.2 million State Farm policyholders will have to find a new insurer.

This was the last thing we wanted to do. This was our last option. We made this move to avoid further financial weakening that would keep us from meeting our contractually obligations to our property insurance customers, said Michael Grimes, a State Farm Spokesman.

With State Farm preparing to begin phasing out policies in November, reports of people not able to find affordable insurance with other companies are beginning to surface.

Lawmakers are questioning the states Office of Insurance Regulation to find out whether or not it did enough to keep State Farm in Florida.

OIR Spokesman Ed Domansky said State Farms request was too high.

State Farms rate filing was simply not approvable. That decision made by our office was affirmed by an administrative law judge, said Domansky.

Insurance lobbyist says the state needs to loosen its rate hike restrictions, or more insurers could leave.

We cant take these kinds of losses in this market. We need more companies here, not less, and when you lose this huge about of capital that State Farm represents, its just difficult to replace it. I dont know if we can do it another time, said Bob Lotane, FAIFA Spokesman

State Farm customers will be given six months notice before their policies are dropped.

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