State Farm cancels thousands in Fla.-125,000 customers to be cut during hurricane season

[babylonsister]

State Farm cancels thousands in Fla.
125,000 customers to be cut during hurricane season



The largest homeowners insurer in Florida is canceling the policies of 125,000 of its most vulnerable customers beginning Aug. 1, halfway through the 2010 hurricane season.

The company, State Farm Florida, began sending out cancellation notices this week to nearly a fifth of its 714,000 customers, most of them in the state’s hurricane-prone coastal regions.

A spokesman for State Farm said the decision was the direct result of its failure to win a 47.1 percent rate increase from state regulators.

State Farm stopped writing new policies and sought the increase a year ago, saying severe losses from a series of devastating hurricanes in recent years had rendered its business model unworkable. It said that without the large increase, it would be insolvent by the end of 2011.

The losses for State Farm are especially large because it is the largest insurer in the state. But the insurance industry across the board has been slammed by heavy hurricane losses in recent years, most notably from hurricanes Ivan (which caused $8.9 billion in damage) and Frances ($8.3 billion) in 2004 and Wilma ($20.6 billion) in 2005.

Although there were no catastrophic hurricane losses in the last two years, the potential continues to drive up costs for Florida insurers, whose access to reinsurance is restricted because of the risk, the state Office of Insurance Regulation said. It projected that 102 of the 200 largest Florida carriers were running net underwriting losses.

more...

http://www.msnbc.msn.com/id/35220269/ns/business-personal_finance

[calico1]

1. Like a good neighbor...

State Farm is there.

Yeah right.

[daleman]

2. Should State Farm insure Floridians and lose money?

It's not personal...it's business! Why should any business be "required" to take a loss? If you want to live in a Hurricane zone, a flood plain etc...shouldn't you expect to pay higher premiums? Other insurers willing to take the "risk" can insure in those areas and some right now are saying that their premiums may even be less than what State Farm was charging....it's a free market society isn't it?

[lonestarnot]

4. Yes.

They've taken enough money to insure Florida for free. And chizeled enough out of people that it wouldn't be free. :thumbsdown: to insurance assholes.

[madrchsod]

3. it`s the cost of reinsurance that made the business decision

several years ago the reinsurance industry raised their rates for coastal areas around the world. these companies decided that global warming will create rises in sea levels and increased hurricanes/typhoons.

[FarCenter]

5. Global warming will very slowly cause sea level rises, but not necessarily more hurricanes

I haven't see anything conclusive regarding the frequency or severity of hurricanes. Since the Arctic regions are warming faster than the equatorial regions, it would seem that there is less of a temperature difference to drive atmospheric circulation.

[daleman]

7. Isn't it the cost of the underwriting losses?

The article says that the State office of Insurance Regulation projects that "102 of the 200 largest Florida carriers were running net underwriting losses." It went on to say that State Farm was losing some 20 million per month!! In State Farm's judgment these losses are unsustainable. It State Farm goes out of business because it is somehow "obligated" to insure and assume these losses then what?
How is that different than saying we either raise our rates or we don't do business in certain areas of the country?

[NightWatcher]

6. now we wait to see if/when we get the notice

then we'll see how bad we're going to be screwed by the next insurance company

[lib2DaBone]

8. The Bankers will ALWAYS get their profit.. you can be assured of that...

Armed with a pocket full of CONgress critters in Washington and at the State level.... you can bet your last dollar they will do what is best for Big Insurance... and screw the homeowner!