Can Florida’s little guys replace State Farm?
From: Florida Association of Realtors
TALLAHASSEE, Fla. – Feb. 5, 2009 – What State Farm sees as a burden, other Florida insurers view
as an opportunity.
As word spreads that the state’s largest private-sector property insurer intends to drop its 1.2
million policyholders within the next two or three years, other companies are already angling to
attract State Farm refugees.
Those companies are far smaller and less well-known than State Farm but say they have
competitive prices, financial stability and local knowledge of the market in their favor.
“Many are ‘tried and tested,’ having been through the storms of 2004 and 2005, and understand the
dynamic Florida homeowners-insurance market,” said former state deputy insurance
commissioner Lisa Miller, now a consultant for financial-services companies, including some small
insurers.
State Farm Florida Insurance Co. announced Jan. 27 that it no longer will provide liability or damage
coverage for homes, condos, commercial properties, personal goods or boats because of
regulators’ refusal to approve higher premiums. Without more money from policyholders, the
company said, it would be unable to pay claims by 2011 and could face insolvency. It said it will
continue selling auto, life and health-related insurance.
Some State Farm property-insurance customers already are looking for alternatives, other insurers
say.
“I think some consumers are upset,” said Robert Ritchie, chief executive officer of American
Integrity Group, a Tampa insurer that says it has been getting calls from State Farm customers and
could take on as many as 50,000 new policyholders.
Pre-screened customers
State Farm’s policyholders are especially desirable to these smaller insurers because they
constitute a customer base already screened and selected by one of the nation’s biggest
companies.
“It’s well underwritten, it’s spread around the state, and State Farm has been shedding some of its
higher-risk areas,” said Locke Burt, CEO of Security First Insurance, which hopes to pick up about
50,000 State Farm policyholders.
Security First already has created a replacement-coverage program especially for State Farm
customers. Burt said many could expect lower premiums with his Volusia County company, which
started offering policies in 2005.
Another company, Edison Insurance, has put a special message for State Farm policyholders on its
Web site. CEO David Howard said the St. Petersburg insurer is offering policies that cost about the
same as those sold by State Farm Florida.
“Based upon our growth pattern, we could pick up about 20,000 to 30,000 [policies],” he said.
Orlando-based Olympus Insurance Co. is not doing anything special to attract State Farm
customers, but it could pick up as many as 150,000 policies – “assuming that we could get a proper
distribution geographically” to manage exposure in high-risk coastal areas, Olympus President
William Lowry said.
“We’re the people that live here in Florida, the people that are still your neighbors,” said Burt, whose
company is based in Ormond Beach.
State Farm Florida, with headquarters in Winter Haven, is a unit of State Farm Mutual Automobile
Insurance Co. of Bloomington, Ill.
Money in till needed
A company seeking to sell property insurance in Florida must prove to the state Office of Insurance
Regulation that it has enough money to pay its claims following a disaster such as a major
hurricane. The state’s financial requirements usually begin at $5 million, or 10 percent of a company’
s liabilities, but then rise based on the number of policies the company issues.
Jim Graganella, CEO of Tallahassee-based Capitol Preferred Insurance Co. and Southern Fidelity
Insurance Co., said the two companies combined could take on about 100,000 State Farm
customers, which would double the companies’ client base. Graganella said the insurers are
changing their Web sites to welcome State Farm customers.
State regulators have 90 days in which to review State Farm’s request to withdraw its property
coverage in Florida. The company then has to give customers six months’ notice of cancellation.
“We are in some uncharted waters, both in the economy and what’s happening with State Farm,”
Graganella said.
Copyright © 2009 The Orlando Sentinel, Fla., Anika Myers Palm. Distributed by McClatchy-Tribune
Information Services.
Related Topics: NAR
Questions, comments or suggestions on this article? Have a news tip? Send a letter to the editor to:
Newseditor@floridarealtors.org.
From: Florida Association of Realtors
TALLAHASSEE, Fla. – Feb. 5, 2009 – What State Farm sees as a burden, other Florida insurers view
as an opportunity.
As word spreads that the state’s largest private-sector property insurer intends to drop its 1.2
million policyholders within the next two or three years, other companies are already angling to
attract State Farm refugees.
Those companies are far smaller and less well-known than State Farm but say they have
competitive prices, financial stability and local knowledge of the market in their favor.
“Many are ‘tried and tested,’ having been through the storms of 2004 and 2005, and understand the
dynamic Florida homeowners-insurance market,” said former state deputy insurance
commissioner Lisa Miller, now a consultant for financial-services companies, including some small
insurers.
State Farm Florida Insurance Co. announced Jan. 27 that it no longer will provide liability or damage
coverage for homes, condos, commercial properties, personal goods or boats because of
regulators’ refusal to approve higher premiums. Without more money from policyholders, the
company said, it would be unable to pay claims by 2011 and could face insolvency. It said it will
continue selling auto, life and health-related insurance.
Some State Farm property-insurance customers already are looking for alternatives, other insurers
say.
“I think some consumers are upset,” said Robert Ritchie, chief executive officer of American
Integrity Group, a Tampa insurer that says it has been getting calls from State Farm customers and
could take on as many as 50,000 new policyholders.
Pre-screened customers
State Farm’s policyholders are especially desirable to these smaller insurers because they
constitute a customer base already screened and selected by one of the nation’s biggest
companies.
“It’s well underwritten, it’s spread around the state, and State Farm has been shedding some of its
higher-risk areas,” said Locke Burt, CEO of Security First Insurance, which hopes to pick up about
50,000 State Farm policyholders.
Security First already has created a replacement-coverage program especially for State Farm
customers. Burt said many could expect lower premiums with his Volusia County company, which
started offering policies in 2005.
Another company, Edison Insurance, has put a special message for State Farm policyholders on its
Web site. CEO David Howard said the St. Petersburg insurer is offering policies that cost about the
same as those sold by State Farm Florida.
“Based upon our growth pattern, we could pick up about 20,000 to 30,000 [policies],” he said.
Orlando-based Olympus Insurance Co. is not doing anything special to attract State Farm
customers, but it could pick up as many as 150,000 policies – “assuming that we could get a proper
distribution geographically” to manage exposure in high-risk coastal areas, Olympus President
William Lowry said.
“We’re the people that live here in Florida, the people that are still your neighbors,” said Burt, whose
company is based in Ormond Beach.
State Farm Florida, with headquarters in Winter Haven, is a unit of State Farm Mutual Automobile
Insurance Co. of Bloomington, Ill.
Money in till needed
A company seeking to sell property insurance in Florida must prove to the state Office of Insurance
Regulation that it has enough money to pay its claims following a disaster such as a major
hurricane. The state’s financial requirements usually begin at $5 million, or 10 percent of a company’
s liabilities, but then rise based on the number of policies the company issues.
Jim Graganella, CEO of Tallahassee-based Capitol Preferred Insurance Co. and Southern Fidelity
Insurance Co., said the two companies combined could take on about 100,000 State Farm
customers, which would double the companies’ client base. Graganella said the insurers are
changing their Web sites to welcome State Farm customers.
State regulators have 90 days in which to review State Farm’s request to withdraw its property
coverage in Florida. The company then has to give customers six months’ notice of cancellation.
“We are in some uncharted waters, both in the economy and what’s happening with State Farm,”
Graganella said.
Copyright © 2009 The Orlando Sentinel, Fla., Anika Myers Palm. Distributed by McClatchy-Tribune
Information Services.
Related Topics: NAR
Questions, comments or suggestions on this article? Have a news tip? Send a letter to the editor to:
Newseditor@floridarealtors.org.
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