[Breaking] State Farm pulling out of Florida for ALL Homeowners insurance

[chyam]

All because they did not get approved for a 47% rate increase! I just got a letter from them about a month ago saying that since I had my auto insurance with them I could also get homeowners at a good rate.....(FL)
I do not believe that an insurance agency has the right to pull policies on people that have been paying to them for years! Many of whom have never placed a claim! It's like they will take our money but when we ask for the coverage that we have paid for for years they say sorry Charley we aren't going to cover you anymore.
Something needs to be done with the insurance industry (all of them, medical, auto, life etc. etc.) everything is fine and dandy as long as we keep writing our checks to them, but what do they expect? that we NEVER make a claim in our lifetimes!
I would love to know if the insurance companies are doing this in other states other than FL....like CA where I am sure fires have damaged as many homes as the hurricanes did down here 4 years ago!

 

[bicker]

I do not believe that an insurance agency has the right to pull policies on people that have been paying to them for years!

Insurance policies have never been written "for years". Generally, insurance policies are written for one year, or perhaps two years. That's it. That means that every year or two you have the opportunity to compare prices and switch to another insurance company, and every year the insurance company has the opportunity compare different options for their underwriting assets and switch to some other option if it is a superior option.

As a matter of fact, the insureds often have an advantage: In many states, you can even switch insurance companies in the middle of your policy period, and get a pro-rated refund from the original insurance company, while they aren't allowed to simply dismiss your policy mid-way through, just because they found a better place to invest those underwriting assets.

Many of whom have never placed a claim!

What does this have to do with it? The likelihood of incurring a catastrophic loss, from a hurricane, for example, is not dependent on a policy-holder's previous claim history.

It's like they will take our money but when we ask for the coverage that we have paid for for years they say sorry Charley we aren't going to cover you anymore.

Again, you only paid them for one (or two) years of coverage. And you get it. Your entire paid-for coverage.

All they are doing is not renewing policies. You have the option not to renew; they have the option not to renew. What would make you think anything else?

Something needs to be done with the insurance industry (all of them, medical, auto, life etc. etc.) everything is fine and dandy as long as we keep writing our checks to them, but what do they expect? that we NEVER make a claim in our lifetimes!

Rather, they expect that providing insurance will be the best possible investment for their underwriting assets. Corporations generally are only allowed to pursue the best financial interests of their owners. If you want insurance policies biased towards the insureds' benefit, then have the state provide the service, and that's exactly what has happened. Folks wanting insurance can get insurance from the Citizens Property Insurance Corp., which is state-sponsored. If the state is going to impose rules that make providing insurance too risk, let the taxpayers incur that unreasonable risk -- don't expect investors in public corporations to do so.

Let me ask you this: Why do you object to getting your insurance from Citizens Property Insurance Corp.? The answer to your question will probably explain to you why State Farm shouldn't be providing service in the state.

I would love to know if the insurance companies are doing this in other states other than FL....

See my earlier message, about automotive insurance in Massachusetts.

 

[okeydokey]

First, my home owners policy only costs me $700/yr today. I am not sure how you think that they paid "tens and tens of thousands of dollars" in 30 years. 30 years ago, a policy would have been about $50/yr.

Second, without insurance you could not buy any big ticket item with credit. You could not buy a car, much less a home. Insurance helps us live the American dream. Without it, almost all Americans would be renters.

Third, insurance companies are a business, and they are taking a beating. Why the heck would they want to insure homes in a state prone to hurricane losses in the $Billions$ every year? It would be like opening a Saks in the ghetto - a sure loser.

Frankly, I am amazed that Floridians can get homeowners insurance that covers storm damage at any cost. If someone just has to live there, why should anyone else pick up a portion of their risk?

Lucky you, I live in FL and not on the ocean and my premiums are three times that today. My family paid way way more than that for years in Ft. Lauderdale. I'm glad you pay so little but they DID pay tens of thousands of dollars over 30 years and then got canceled when they filed a claim.

 

[Feralpeg]

I do understand the concept behind insurance. They are a business and want to make money. I am glad that I have not had to file claims and realize that I pay for the peace of mind. I do, however, have a problem with companies that are more than glad to accept my money when things are going great, but must pull out when things aren't so rosey. I'd have a problem with any company doing that. It is the nature of business. All companies will have highs and lows. The fact that State Farm made record profits last year and that the CEO manage to get a large raise and bonus tells me that things aren't bad for the company.

To me, insurance companies are like little kids. They are happy to play until things aren't going their way, then they take their toys and run away.

I agree, it was my choice to live in the Orlando area. I realize there is a little more risk here than in some other state, but there are many other areas just as prone to natural disasters. Why aren't they pulling out of Texas and the other coastal states? I don't live on the coast and the chances of another year like 2004 are slim. I just switched to State Farm a year ago when my previous insurance company pulled out of Florida. This is getting to be a pain. Sorry...need to vent.

 

[RitaZ.]

I do understand the concept behind insurance. They are a business and want to make money. I am glad that I have not had to file claims and realize that I pay for the peace of mind. I do, however, have a problem with companies that are more than glad to accept my money when things are going great, but must pull out when things aren't so rosey. I'd have a problem with any company doing that. It is the nature of business. All companies will have highs and lows. The fact that State Farm made record profits last year and that the CEO manage to get a large raise and bonus tells me that things aren't bad for the company.

To me, insurance companies are like little kids. They are happy to play until things aren't going their way, then they take their toys and run away.

I agree, it was my choice to live in the Orlando area. I realize there is a little more risk here than in some other state, but there are many other areas just as prone to natural disasters. Why aren't they pulling out of Texas and the other coastal states? I don't live on the coast and the chances of another year like 2004 are slim. I just switched to State Farm a year ago when my previous insurance company pulled out of Florida. This is getting to be a pain. Sorry...need to vent.

Peg, I totally understand where you're coming from. I agree and sympathize with you. We were dropped after having our policy with the same company for 10 yrs. One of my neighbors was dropped after 15 yrs. with Allstate. We currently pay almost $4k and that's lower than what we used to pay. Add another $450 for flood.

Just remember, it's easy to be objective when the problem is someone else's reality. The only people that defend insurance companies in FL are insurance agents.

 

[SundancePass]

With insurance, if it isn't ants, it's spiders. Something always to complain about. Howver, after reading the link OP about the "new" rules in 2005, I wouldn't do business in Florida either.

Some of us have high insurance costs, some of us have high State income taxes (I live in Minnesota), some of us have hight protery taxes, and some of us have them all. Sounds like Florida has high property taxes and high inisurance costs.


PP do you mind sharing the size of your home that costs $4k per year to insure. I am just curious as we are looking to buy a home ourside of Orlando. We know about the property taxes - 2% roughly of the cost. We have NO idea about insurance costs.

Thanks!

 

[RitaZ.]

With insurance, if it isn't ants, it's spiders. Something always to complain about. Howver, after reading the link OP about the "new" rules in 2005, I wouldn't do business in Florida either.

Some of us have high insurance costs, some of us have high State income taxes (I live in Minnesota), some of us have hight protery taxes, and some of us have them all. Sounds like Florida has high property taxes and high inisurance costs.


PP do you mind sharing the size of your home that costs $4k per year to insure. I am just curious as we are looking to buy a home ourside of Orlando. We know about the property taxes - 2% roughly of the cost. We have NO idea about insurance costs.

Thanks!

Our home is a little over 2400 sq. ft. We are not on or near the water. Insurance costs in S. FL are higher than in Orlando.

 

[luvmy3]

Just remember, it's easy to be objective when the problem is someone else's reality. The only people that defend insurance companies in FL are insurance agents.

I see it as pretty straight foward and would see it the same if I lived in FL as well.

State Farm can no longer guarentee they will have enough money to cover their customer's damages, expecially in the event of a huge natural disaster. They are not allowed to raise their premiums to be able to cover such damages.
They are doing the responsible thing. If they stay and continue to collect (and lose money) and God forbid a hurricane hit, what happens when they can't cover the claims by their customers, because that is what will happen. Customers will lose everything and SF will be no more.
By pulling out they are doing the responsible thing. They are able to keep their business from going under and they are giving their customers the opportunity to find an insurance company that will be able to protect their investment (home and belongings) in case of disaster. I know it gives you all one less option and you will probably be spending more for your insurance, but isn't that better than paying for something that isn't going to be there for you when you do need it?

 

[bicker]

I do, however, have a problem with companies that are more than glad to accept my money when things are going great, but must pull out when things aren't so rosey.

Please say exactly what you mean, rather than using euphemisms or any other vague references, so I do not misinterpret what you've written yet-again. I say this because I read what you've written here to say is that you have a problem with a business offering its services when doing so is the most profitable utilization of its assets and no longer offering its service when that is no longer the case. If so, then all I can say is that, given you have a problem with that, you will be continually disappointed with the way things work.

There is no right to insurance from the company of your choice.

A company that doesn't operate in the best interests of its owners, i.e., focusing on the most profitable utilization of the owner's assets, is just setting itself up for shareholder lawsuits.

The fact that State Farm made record profits last year and that the CEO manage to get a large raise and bonus tells me that things aren't bad for the company.

That isn't relevant. The object of a corporation isn't to be "not bad". The object of a corporation is to make best use of the owner's assets.

To me, insurance companies are like little kids. They are happy to play until things aren't going their way, then they take their toys and run away.

Then, with respect, you don't understand the nature of corporations in America.


I'll direct the same question to you that I directed to chyam earlier: Why do you object to getting your insurance from Citizens Property Insurance Corp.?

 

[bicker]

Howver, after reading the link OP about the "new" rules in 2005, I wouldn't do business in Florida either.

This is a good point. I think I'd be sympathetic if the citizens' elected representatives and their appointees haven't so vigorously fostered such an anti-business climate in the state. Regulations on business are supposed to keep companies honest -- not impose unfunded mandates on them, that make it so much less profitable that companies would rather not do business there at all. It is the obligation of the state to foster a business environment where companies want to do business, not to chase businesses away.

 

[Feralpeg]

Please say exactly what you mean, rather than using euphemisms or any other vague references, so I do not misinterpret what you've written yet-again. I say this because I read what you've written here to say is that you have a problem with a business offering its services when doing so is the most profitable utilization of its assets and no longer offering its service when that is no longer the case. If so, then all I can say is that, given you have a problem with that, you will be continually disappointed with the way things work.

There is no right to insurance from the company of your choice.

A company that doesn't operate in the best interests of its owners, i.e., focusing on the most profitable utilization of the owner's assets, is just setting itself up for shareholder lawsuits.

That isn't relevant. The object of a corporation isn't to be "not bad". The object of a corporation is to make best use of the owner's assets.

Then, with respect, you don't understand the nature of corporations in America.


I'll direct the same question to you that I directed to chyam earlier: Why do you object to getting your insurance from Citizens Property Insurance Corp.?

I believe I said what I meant. I find your statements very condescending. I understand that the purpose of corporate America is profit. I've worked in the corporate world most of my life. However, bailing on the people who are keeping your business profitable when they have a problem is not the best way to keep your business profitable in the long run.

For instance, I worked for 30 years for a company that does the software and record keeping for most of the large mutual fund companies in the country. Due to the economic problems the country is currently suffering, many of those same companies are in trouble. They came to my old company saying they are in danger of going under. They paid fees to my old company to service their accounts. In order to keep those mutual fund companies going, my old company dropped the fees they charged. They did this knowing it would affect their bottom line, but in the long run, it would make them profitable by ensuring that the mutual fund companies would be more likely to survive the economic downturn. Because of their action, my old company was not able to give any salary increases or bonuses to its employees this past year. In fact, the CEO and CFO of the company actually reduced their salaries. By the way, my old company is a publicly traded corporation and, as such, has a responsibility to its shareholders. They have a responsibility to the shareholders to make the right decisions for the long term.

My point being, that companies want to make money over the long haul. Sometimes, to do that, they might want to bite the bullet to ensure that their customers will be able to get through the hard times and be that much better customers in the future. Pull and run when times get hard and it will not help the reputation of the company.

 

[sorul82?]

I would love to know if the insurance companies are doing this in other states other than FL....like CA where I am sure fires have damaged as many homes as the hurricanes did down here 4 years ago!

Here in NC, the folks in the Eastern part of the state are facing premium increases.

 

[jimmalru80]

I would love to know if the insurance companies are doing this in other states other than FL....like CA where I am sure fires have damaged as many homes as the hurricanes did down here 4 years ago!

Try getting property insurance on barrier islands in NJ.

 

[bicker]

I believe I said what I meant.

So my interpretation was correct?

I find your statements very condescending.

Then you've misunderstood.

However, bailing on the people who are keeping your business profitable when they have a problem is not the best way to keep your business profitable in the long run.

No one has bailed on anyone. That was my point. You're abusing words. There is no bailing going on.

They did this knowing it would affect their bottom line...

They also assessed how what they did would influence long-term shareholder value -- either that or they exhibited distinct disrespect for their owners -- one or the other.

My point being, that companies want to make money over the long haul. Sometimes, to do that, they might want to bite the bullet to ensure that their customers will be able to get through the hard times and be that much better customers in the future.

First, what evidence do you have that subjecting themselves to your state's rules would qualify under that criterion? Second, corporations don't have the luxury to make very long-term decisions, for a variety of reasons: Cash flow, investor pressure for quarterly returns, analysts ratings affecting credit worthiness (in turn affecting rates for borrowing money), etc. What good is making the "best" long-term decision, if you're fired for making that decision, and the person you're replaced by immediately reverses your decision (that judgment being one reason why they were put in that position)?

Pull and run when times get hard and it will not help the reputation of the company.

Reputation operates on many levels. I alluded to, above, the reputation of the company, in the eyes of its investors, and in the eyes of analysts. Those groups are far more loyal to companies that foster good reputation from their perspectives than consumers are. Consumers are becoming notoriously disloyal, switching provider whenever they perceive the ability to save some money, with practically no regard to quality of service, reputation, etc. We consumers have, for all practical purposes, scuttled any value our loyalty (defined as our willingness to pay a premium for a specific company's offerings) may once have represented.

As someone mentioned earlier, this isn't an ideal world: Corporations have to operate according to the entirety of the reality imposed on them, and many different agents (typically with diametrically oppositional priorities) impose realities on corporations. Corporations cannot just narrowly comply with the reality that consumers would have placed on them, and indeed, given the lack of value of customer loyalty, I mentioned above, the specific priorities of consumers generally are substantially buffered by that of other, powerful stakeholders.

 

[MarkBarbieri]

State Farm considers Florida high risk. What about Texas? Louisiana and the other gulf states? Will they be next? What about the northeast? They've had a lot of damage from ice storms over the past couple of years. California? Fires must make it difficult for the insurance companies.

As it has always been, insurance companies are great when we are paying them. When they have to start paying claims, they can't handle the loss. What happened to all those years Floridians paid in without any hurricane losses?

I do understand the concept behind insurance. They are a business and want to make money. I am glad that I have not had to file claims and realize that I pay for the peace of mind. I do, however, have a problem with companies that are more than glad to accept my money when things are going great, but must pull out when things aren't so rosey. I'd have a problem with any company doing that. It is the nature of business. All companies will have highs and lows. The fact that State Farm made record profits last year and that the CEO manage to get a large raise and bonus tells me that things aren't bad for the company.

To me, insurance companies are like little kids. They are happy to play until things aren't going their way, then they take their toys and run away.

I agree, it was my choice to live in the Orlando area. I realize there is a little more risk here than in some other state, but there are many other areas just as prone to natural disasters. Why aren't they pulling out of Texas and the other coastal states? I don't live on the coast and the chances of another year like 2004 are slim. I just switched to State Farm a year ago when my previous insurance company pulled out of Florida. This is getting to be a pain. Sorry...need to vent.

I live in Texas. I'm not totally clear on how our insurance industry is regulated, but we have definitely had disputes in the last few years. In coastal areas, wind coverage is now a separate item and a wind insurer of last resort was set up.

In the end, I'd guess that insurers here are staying because they find it profitable to do so. If our regulators make it unprofitable for them, they will leave.

I don't know who is to blame or how, but it is apparent that Florida and State Farm disagree on what a reasonable and profitable rate should be. If State Farm is full of @#$%, then others will happily snap up their customers. If the state is being unreasonable, then it will be hard for those State Farm customers to find insurance. If you are a Florida resident and you are having trouble finding an insurer, don't blame the companies, blame your regulators and your home builders.

 

[safetymom]

For many who live in FL they have not been hit by hurricanes for many many years.

For those saying this is a good thing would you feel this way if it was your state and your insurance company pulling out?

 

[ZachnElli]

However, bailing on the people who are keeping your business profitable when they have a problem is not the best way to keep your business profitable in the long run.

But the state of Florida is NOT keeping their business profitable. They borrowed money in 2004 from State Farm Mutual and State Farm Florida can't pay it back. None of it. And that was just the cost of claims, not including operating costs. How many years should that go on? All insurance companies are expecting this to be a bad year legislation wise for them. And they expect the regulations on them in Florida to be even stricter.

As for other states that get hit by storms, the cost of our tornados doesn't come close to those hurricanes. Hurricanes cost billions. I've never heard of tornados costing billions. And yes, I expect my premiums to go up this year. We had alot of storms last year, lots of neighbors with tarp on their roofs because their shingles where blown off and some siding damage. Our premiums always go up after a season like that, even though we didn't make a claim (we were fortunate).

 

[MarkBarbieri]

The Wall Street Journal has an editorial on the topic here.

 

[kbkids]

Lucky you, I live in FL and not on the ocean and my premiums are three times that today. My family paid way way more than that for years in Ft. Lauderdale. I'm glad you pay so little but they DID pay tens of thousands of dollars over 30 years and then got canceled when they filed a claim.

I was going to say the same thing. We're in the panhandle and went through both major hurricanes that came through here, luckily with no insurance claims. We still pay $2600 a year for insurance. Yeh, you can easily rack up tens of thousands of dollars in a very short time here.

My parents had the same thing happen to them, again after being with the company for 39 years. Unfortuantely, they weren't as lucky with one of the hurricanes, a tree fell on the house. Insurance paid out with no problems (about $10,000) and then promptly canceled them. Yeh, seems fair. We'll take your money for 39 years and promise to help you if you have a problem - but only once! After then, we're done with you. They had been paying about $1500 for many years! So, yeh, they made quite the profit off of them.

My FIL, whose house is paid for, and we totally freaked when he did this, but couldn't stop him decided to just be self insured. When he got canceled, he just started putting the premiums plus some into an investment account. Said he was tired of dealing with the jerks. Yep, risky - but at least he's not dealing with people walking with his money. He has a smaller home and has racked up quite the little nest egg. If something happens stormwise, he'll be fine.

 

[ford family]

In the end, money -- of course, right? The insurance commission was imposing too many regulations, forcing insurers to provide insurance for high-risk drivers at a price lower than the risk associated with providing that insurance warranted.

I just read those rules, in the second link you provided. Holy cow, no wonder why they're refusing to offer policies in Florida going forward. Again, selling insurance isn't gambling. If the state makes the rules such that the insurer cannot assure the underwriters of more profit than they could get by investing their money in some other way, then that state doesn't deserve the insurance company's offerings.

But in the case of State Farm, didin't the Florida unit buy reinsurance from the parent company at vastly over market prices thus making the Florida unit look unprofitable and requiring the massive hike in rates that was denied?

ford family