State Farm, Florida’s second largest insurance provider, announced on Tuesday that it will no longer provide homeowners insurance to Florida residents. Well over a million customers are rushing to find new coverage in the wake of the announcement. The insurer claims that Florida’s state-mandated rate discounts are costing the company too much. The state recently denied State Farm’s request for a 47.1 % rate increase.
Florida lawmakers took a stronger stance with insurance companies in 2007, after fifteen years of trying to appease insurers to work with the hurricane-troubled state. Appeasement didn’t work, and the state trying to rein in the industry to benefit consumers. In response to State Farm’s announcement, Governor Charlie Crist reportedly said that, if State Farm won’t offer homeowners policies in Florida, the company shouldn’t be permitted to sell life or auto policies in the state either.
Louisiana lawmakers, faced with similar difficulties, have taken a very different approach. The state is trying hard to encourage insurers to do business in the state. Some believe that Louisiana’s insurance market is in stronger shape at this point, but the director of insurance for the Consumer Federation of America Bob Hunter says that it will be some time before it becomes clear which approach is working better.
For more on this story, go to the New Orleans Times-Picayune.