Posts Tagged ‘State Farm Florida’

Florida Home Insurance Rate Increases – Can You Avoid Them?

January 3, 2010

Recent Florida Legislation signed into law by Governor Charlie Crist was a necessary step required to strengthen the stability of the Florida Property Insurance system.  Citizens Property Insurance will be allowed to raise Florida home insurance rates as 10% per year until the premiums they charge more closely reflect the risks the company is taking.  Private Florida home insurance companies will also be allowed to raise rates to cover the additional reinsurance they are expected to buy in the private market instead of from the Florida Hurricane Catastrophe Fund.

The bright spot is that the Florida insurance system will be on a much stronger financial footing in the coming years if the state can continue the limited hurricane activity it has enjoyed during the past few years – something that has to happen to improve the chances that most Florida home insurance companies can make good on their promise to pay your hurricane claim quickly and fairly.

The bad news is the fact that all of us will be facing up to a 10% increase in Florida homeowner insurance rates.  A rate increase of 10% might not sound like much of an increase in other states but in Florida the situation is much different.  These increases will be based on higher premiums already in effect after the major rate increases approved after the 2004/2005 Florida hurricanes.  Even before the coming 10% increase, consumers in Florida were already paying the highest home insurance rates in the country.

The rate increases could not be coming at a worse time.  To begin with, Florida is in the middle of a financial crisis just like the rest of the country with depressed real estate, bankruptcies, foreclosure, and increases in unemployment.  These rate increases are going to start happening at the exact same time that State Farm Florida will start cancelling up to 30,000 policies per month as they start exiting the Florida property insurance market.  Our subscribers who presently have their insurance with State Farm are telling us that finding comparable coverage with another Florida home insurance company may cost them up to 200% more after they lose their coverage with State Farm.

So what is the bottom line for you as a Florida homeowner insurance consumer as we move through this challenging period?

To start with, you have to understand that even though there are only 40 companies still writing new business, you still have a good chance of locating 5-10 companies from this group that may still be willing to cover your home – even if it is an older home or has close proximity to the coast.

It is very important for you to shop your Florida home insurance policy with more than one independent agent – someone who represents multiple Florida homeowner insurance companies looking for your business.  Contacting multiple independent agent will ensure that you are able to get quotes from all the companies in your county who want to cover your home – not just the Florida home insurance companies carried by a single agent.

Also, you have to do due diligence and research on all of the Florida homeowners insurance companies that you are getting quotes from.  The 40 companies still willing to write new business vary greatly in terms of their size, financial resources, insurance industry experience, and customer service history.  It is important that you ask your agent how each of the companies you are considering is performing in each of these areas.

As you come up with a short list of companies, work with several independent Florida insurance agents and make sure that you have received quotes from all the companies in your county that are interested in covering your home.  As you evaluate the quotes, don’t buy the Florida insurance for your home simply on price.  Find the right balance of financial stability, outstanding customer service, and the price of the policy.  After all, paying a low price for Florida home insurance isn’t really a bargain if the company you pick pays slowly and won’t pay the full amount that you need to repair the damage to your home after a Florida hurricane?

There is little doubt that these recently approved increases in Florida home insurance will be very difficult to swallow and the timing is very bad.  However, if you take the time to find all of the Florida home insurance companies that are interested in covering your home, you might be able to fight off all of the 10% increase while everyone else has to pay up.  Your research can save you thousands!


Michael Letcher is a Fortune 500 executive and a licensed Certified Public Accountant.  His on-line guide can help you find low cost insurance Florida.  Learn the secrets to affordable Florida insurance in his free newsletter at =>


State Farm Florida – How to Respond to the Big Announcement

January 3, 2010

State Farm Florida Insurance Company announced in January that it is leaving the Florida Property and Casualty Insurance Market.  The only thing left to be decided is when the cancellations will begin.

An estimated 700,000 State Farm Florida home insurance policies that are expected to be cancelled over a two year period – that’s over 29,000 policies that will be cancelled each and every month for two years.  Regardless of your perspective, this is the most significant event that has ever occurred in the history of the Florida homeowners insurance market – and you could not pick a worse time for this to happen.

To begin with, many of the home insurance policies that will be dropped by State Farm Florida will occur at the exact same time that Citizens Property Insurance will be moving forward with higher rates in 2010 as required by law.

Although dumping on big insurance in Florida has become one of our favorite things to do, here are some little known facts that won’t ever make the coverage of State Farm Florida‘s planned withdrawal from the state:

Customers of State Farm Florida love this company, its customer service, the multiline discounts, and the fast and fair claim service they received from the company after the 2004/2005 Florida hurricanes.

When State Farm Insurance FL customers are asked to rate their overall satisfaction with the company on a “1-10” scale, many rate the company as a “10” even if their policy is being cancelled by the company!

Although State Farm Florida’s 47% rate increase was turned down prior to their withdrawal announcement, most of the data that we are collecting says that the annual premiums State Farm Florida policyholders are paying are among the lowest in Florida – partially from the multi-line discounts and also due to the significant wind mitigation credits that many customers are receiving.

None of the above changes the fact that State Farm Florida is leaving the Florida home insurance market.  Given this reality, here is what you need to be aware of if you are a State Farm Florida policyholder and want to take proactive steps in response to the company’s announcement.

To begin with, your State Farm Florida Insurance Agent is not allowed at the present time to present you with any other alternative Florida homeowners insurance companies except for Florida’s state run insurance company of last resort – Citizens Property Insurance Corporation – which has publicly stated that it is currently underfunded and overly dependent on hostile financial bond market borrowing on unfriendly terms in order to pay major hurricane claims.

As you look for companies to replace your State Farm Florida home insurance policy, many of you will be facing increases that range from 70% to over 200% on your annual premium.

Watch for dramatic differences as you move to a new Florida homeowners insurance company – both in terms of the size of the financial surplus it has available to pay your claim and in the headcount it has available for customer service and claims processing.  State Farm Florida has more financial surplus available to pay its claims than the majority of the 40 other companies that are still writing new Florida homeowners insurance business combined!

Much of the advice that you’ve received as a State Farm Florida policyholder has been that you should not take any action now and that you should wait for your Florida home insurance cancellation notice.  If you take that advice you could be very sorry in Florida’s dysfunctional home insurance market:

To begin with, you’ve probably heard reports about many Florida homeowners insurance companies that have stated that they are interested in picking up your State Farm Florida homeowners insurance policy.  Don’t assume that there will be plenty of policies with a new company to go around when your State Farm Florida policy is cancelled.

Some of the companies that initially stated their interest in picking up State Farm Florida policies have tightened up their underwriting guidelines and become more selective about the kind of homes they will accept.  Since the State Farm Florida exit announcement, two companies that had expressed interest in taking on some of the policies have had their licenses temporarily suspended.

Many of the State Farm Florida policies being cancelled are homes that were built between 1950 and 1981 – prior to the higher wind standards in the Florida Building Code improvements made in the 1990’s – not exactly the kind of homes that Florida home insurance companies are going to be anxious to cover.

Because of the financial shortfalls at both Citizens Property Insurance Corporation and The Florida Hurricane Catastrophe Fund, if there is a major Florida hurricane during the 2009 season, don’t expect any companies to be willing to pick up your policy when State Farm Florida cancels it starting in 2010.

Here’s what you should do right now if you are a State Farm Florida home insurance policyholder:

Don’t wait until you receive your cancellation notice – start shopping for a new company right now!

Call several Florida independent home insurance agents that represent multiple homeowners insurance companies and find a new private insurance policy before June 1st when the 2009 hurricane season begins.

Do in depth research on all of the Florida home insurance companies you are considering.  If you get a letter from a Florida home insurance company offering to take over your insurance policy, don’t accept the offer of new coverage until you have thoroughly checked out the new company.

Don’t accept your State Farm Florida home insurance policy being moved into Citizens Property Insurance Corporation unless you have personally done the research and confirmed that there aren’t any private Florida home insurance companies who want to cover your home.

Finally, as someone who knows the score in the Florida property insurance market, you know that finding a new company in Florida has never been easy – from the time of Hurricane Andrew in 1992 and continuing through to today.

That’s why it is essential that you start shopping now for a new policy.  Don’t wait for State Farm Florida to cancel your policy.   If you do, you’ll have the unpleasant experience of scrambling and competing with 29,000 other State Farm policyholders who will be looking for a new Florida home insurance policy at the exact same time that you are.

It’s a game of musical chairs that you have to avoid at all costs!


Michael Letcher is a Fortune 500 executive and a licensed Certified Public Accountant.  His on-line guide can help you find affordable options to Citizens Insurance.  Get all the secrets to low cost Florida insurance in his free newsletter at =>

Florida Homeowners Insurance Companies – Don’t Hate Them All

January 3, 2010

Being mad at Florida home insurance companies has become commonplace after many large companies started exiting the state after Hurricane Andrew – something that has continued thru today.  After Florida’s 2004/2005 hurricanes, companies raised their rates and continued to cancel policies.

But there are now two distinct groups of home insurance companies in Florida.  The first group of companies consists of well known national names such as State Farm Florida, Allstate Floridian, and Nationwide Insurance Company of Florida among others.  The second group consists of recently formed Florida based companies that have commenced operations in the past 15 years – many since the end of 2005.

In this brave new world of big companies leaving and new companies entering the Florida property insurance market, it is the second group of recently formed companies that we should be giving a break.  Here’s why:

After the 2007 legislation, it was the recently formed companies that actually reduced homeowners insurance rates in Florida as a response to this legislation while many of the national companies stubbornly pursued rate increases.

It is the newer companies that are continuing to write new business in Florida while the long established national companies continue to drop and cancel Florida home insurance policies.

The Florida based start-ups are more willing to consider insuring older Florida homes and properties near the coast – risks that the national companies abandoned years ago and continue to shed.

Finally, these newer start up companies deserve a chance to build up their capital reserves and to expand responsibly.  They are our future if there is any hope of Florida taxpayers and policyholders avoiding massive special assessments that we could face if Citizens Property Insurance Corporation or the Florida Hurricane Catastrophe Fund ever come up short.

Some of the more recently formed companies have begun to expand their risks across Florida and into other states as well.  This risk diversification is a good thing that will reduce the chances of one particular company going broke after a major hurricane.

Finally, from a policy perspective, the State of Florida needs to take a new look at how it considers request to increase rates.  At the present time the system is not working property – the larger companies bailing out on the state are still getting higher rates or smaller decreases than the newer companies that are taking more and more of Florida’s hurricane risk.

Companies that can demonstrate that they are growing their policy base and those that can show a track record of covering older and coastal homes should be permitted more pricing power and granted higher rate increases than the companies that are bailing out.

This is not to say that the newer companies are perfect.  They have opportunities to improve too – especially in the area of customer service as they try to operate with leaner staffs and to take advantage of pooled customer support centers.

However, the next time you are part of a discussion where hatred is being focused on all home insurance companies in Florida, be careful not to paint all of them with the same broad brush.  Many of the newer companies are covering your higher risk homes, taking steps to reduce costs and your premiums, and assuming risks that used to be part of Citizens Property Insurance.

Give these newer companies credit for assisting Florida during this challenging period.  The more of these companies that can be created and built up with a decent base of premiums and capital, the better it will be for all of Florida in the long run.


Michael Letcher is a former Bank of America and W.R. Grace executive and a licensed CPA.  His on-line buyers guide can help you find affordable homeowners insurance Tampa.  Find out the secrets to low cost Florida insurance in his free newsletter at =>

State Farm Florida – Will it Exit the Florida Property Insurance Market?

January 2, 2010

For a long time, State Farm Insurance FL has been one of the few Fortune 500 home insurance companies still operating in Florida.  It remains by far the largest private company for both homes and autos with 1 million and 2.5 million policies respectively.

They should be commended for that.

After all, many big insurance companies simply left Florida for good after Hurricane Andrew – and never looked back.  That left Florida to deal with the problem on its own and caused it to create its own state run insurance company of last resort to help those who simply could not find coverage.

State Farm Florida Insurance Company did not follow this approach.

It has taken a prudent approach to the market that has been present in Florida since Hurricane Andrew.  These steps have included:

Strict underwriting criteria for homes selected for new business

Multiline discounts for policyholders with home, auto, and life coverage

Selectively cancelling higher risk older homes closer to the coastline

This approach might have been successful during normal, reasonable periods of history.  However, reasonable is not the right word to use for what has happened in Florida in recent years:

From 1992 to 2004, no large insurance companies re-entered the Florida property insurance market – leaving State Farm on its own.

Florida hurricane claims in 2004 and 2005 caused billions of dollars in damage.  State Farm Florida paid millions in claims and had to request an emergency cash infusion from its parent company to recapitalize it.

While the company received significant rate increases following the 2004/2005 hurricanes, large rate increases given to most Florida home insurance companies in 2005 and 2006 caused a major political backlash.  Quite honestly, the public demanded rate relief because Florida home insurance was simply not affordable.

The pressure for lower rates was far worse due to outrageous property taxes and the collapse of the Florida real estate market.

The State of Florida reacted to voter pressure.  However the final impact was not impressive.

Legislation passed in 2007 and 2008 had a limited effect in lowering home insurance rates while shifting billions of dollars in catastrophic hurricane risk to the Florida Hurricane Catastrophe Fund – a state entity that has publicly stated that it can’t meet its reinsurance obligation to insurance companies in part due to the frozen bond markets.

As a result, all companies including State Farm Insurance Florida are concerned that the Florida Cat Fund won’t be there to pay them back after a major hurricane and are looking for new sources of backup reinsurance.

That, combined with other factors led the company to request a 47% rate increase a few months ago.  After state regulators rejected the rate increase, the company appealed that decision in court.  Recently a judge agreed with state regulators that the State Farm Florida 47% rate increase was not justified and also rejected the rate increase.

This brings us to where we are today – a time when many Floridians have to be wondering if State Farm Insurance FL  is preparing to exit the state for good.  This would not be welcome news and would cause a major shock to the Florida property insurance market as policyholders scramble to find other coverage.

You have to be ready for the realities that come with today’s uncertain times.  One of those might be that your State Farm homeowners insurance policy in Florida will be cancelled or dropped.  If that happens there are several things you need to do to respond to this:

Shop your policy.  Most State Farm Florida agents can only offer you homeowners coverage with Citizens Property Insurance after your policy is cancelled.  Find a large independent agent who represents multiple companies in order to give you the best options for replacing State Farm Florida.

There are many new insurance companies local to Florida that have come into existence in the past 15 years, many of which have only been approved since the start of 2006.  Some of these companies might be a good option to replace State Farm but you have to research each and every one of them.  Review their financial ratings and their experience with customer service completely.

Insurance agents for State Farm Florida will be hurt by large cancellations of homeowners insurance policies.  They have spent years building a book of insurance business in Florida.  When they lose your home insurance business, it usually means they lose your car and life insurance business as well.  While you can’t help but be sympathetic, you need to know that it is in your agent’s self interest to keep your auto and life insurance business while putting your home insurance coverage into Citizens Property Insurance Corporation.  Don’t accept being placed with Citizens without looking for other private home insurance companies through other agents that can also offer you auto and life insurance.

Get all the facts if you are thinking about Citizens Property insurance.  Citizens has stated the premiums it charges are not high enough to cover the risks that the company takes.  It is also experiencing problems with borrowing to pay major hurricane claims in today’s shaky bond markets.  Major recommendations being presently considered at Citizens include raising rates, limiting coverage, and mandating certain home hardening measures.  Do your home work on Citizens just like you would for any other company.

While it is impossible to know how this drama with State Farm Insurance FL will conclude, by following these steps you’ll be way ahead of thousands of other policyholders who will all be scrambling to replace their coverage at the same time.


Michael Letcher is a former Fortune 500 executive with Bank of America and W.R. Grace and a licensed CPA.  His on-line buyers guide can help you if you are cancelled by State Farm Florida Insurance Company.  Get his free newsletter at =>

Get Cheap Florida Home Insurance in a Confusing Market

January 2, 2010

The Florida home insurance crisis just won’t go away.

Even though Florida has been mostly hurricane free the past three years, new clouds are forming on the horizon as many Florida insurance companies may look to raise rates.  And if they don’t get the rates that they want, you should expect them to start dropping and cancelling policies again.

State Farm Insurance Florida is leading the way on this.  After Florida recently rejected the company’s 47% rate increase, State Farm Insurance FL  is appealing that decision in court.  You should expect other companies to follow the lead of State Farm Florida.

Prior to Hurricane Andrew in 1992 it was easy to find homeowners insurance in Florida.  It was simply a matter of picking up the phone book and calling your nearest agent.  There were hundreds of companies who wanted your business.

That kind of Florida property insurance market is long gone – replaced today by a dysfunctional market where less than 40 companies are actively writing any new business at any time in the state.  And unlike the old days where companies had large surpluses and deep multinational parents to help absorb hurricane claims, most of the home insurance companies still active in the market are very small, Florida based companies.

Many of these Florida based companies just opened their doors for business during the past three years.  As a result, there is a lot of concern about many of these companies being undercapitalized and lacking in post hurricane claim processing experience – a potentially lethal combination that could lead to long delays in getting claims paid after a Florida hurricane.

In this brave new world of smaller, newer, lightly funded Florida home insurance companies, shopping for insurance the old way just won’t work anymore.  As a smart shopper, you have to change the way you shop for insurance to be successful in today’s Florida property insurance market.

Here’s how you can be a smart consumer and find affordable Florida home insurance:

Don’t use a captive Florida insurance agent that only represents a limited number of companies.  Instead use an independent agent that represents multiple companies that will allow the agent to present you with many options.

Don’t work with only one independent agent.  Work with several.  Why?  Because a single agent doesn’t represent all of the companies still writing new business in today’s Florida insurance market.

Find out the names of the Florida home insurance companies that use a general agent or write policies directly without using an independent agent network.  This is significant because some companies have cut costs by eliminating insurance agent commissions.  If you pursue this, make sure you are familiar with every line of coverage on your current policy because you won’t have the benefit of the personalized service of an independent agent.  You’ll have more choices this way, but you will be on your own.

Find out the financial ratings of each of the companies you are considering.  Don’t select a company solely based on a lower price.  You have to find out how much surplus each company has on hand to pay their claims when they happen.

Ask your agent about the company’s risk diversification.  How many policies does the company have in Florida?  Where are their policies situated?  How are they distributed across the State of Florida?  Are they reasonably spread out across the state or are they primarily located in the hurricane prone areas of South Florida?

Find out the number of years the company has been in business, and whether they have any prior experience with Florida hurricane claims.  You don’t want your claim to be “on the job training” for a brand new company.  Check with your agent to find out the history of complaints filed against the company.

In this market, your goal is to create as much competition for your policy as possible.  After you’ve received quotes from multiple agents and companies its time to narrow the field.  Don’t make your decision on price alone.  Make sure the coverage from multiple companies is identical.  After you’ve looked at the coverage, narrow the field further based on the financials and customer service history of each company.

Give serious consideration to paying more for a policy from a company that has more surplus, stronger financials, has been in business longer, and has fewer complaints in its history.

Last but not least – don’t allow your policy to be placed in Florida’s state run carrier of last resort – Citizens Property Insurance Corporation unless you’ve exhausted all of your private company options.

By following these steps you’ll create competition for your Florida homeowners insurance policy and you’ll be getting the most that you can for your insurance dollar.


Michael Letcher is a former Fortune 500 executive and is a licensed CPA.  His on line guide can help you get affordable South Florida homeowners insurance.  Find out the secrets of the Florida property insurance market in his free newsletter by visiting =>