In further developments to State Farm’s desired exit from providing insurance to customers in Florida, the state’s insurance regulators have begun investigating and questioning just how reasonable the insurer’s claims are.
Insurance regulators question State Farm’s dire claim
By Paige St. John
State Farm, Florida’s second-largest home insurer, pleads poverty as it attempts to exit the state and send more than 700,000 customers scrambling for coverage.
Company officials say they are losing $20 million a month. After being denied a 47 percent rate increase late last year, continuing to operate in Florida “would have resulted in insolvency,” said State Farm Florida CEO James Thompson.
But a review of the company’s regulatory filings suggests a different picture:
Over the past decade, State Farm Florida collected $2.6 billion more in premiums than it paid out in claims. State Farm says all that money has been used to pay expenses.
In the past four years, State Farm Florida has moved $2 billion out of Florida to its parent company for reinsurance, paying its parent to assume nearly all of its hurricane risk.
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