State Auto Withdraws from Market

The Columbus, Ohio-based State Auto Insurance Co., has announced that it will stop providing coverage in the state as of Jan. 1, 2008. The companies will stop renewing auto, non-standard auto, homeowners, and variety of other miscellaneous personal lines coverage. The move, however, will not affect the insurer's commercial insurance business. The Florida Association of Insurance Agents announced the move would affect some 44 local independent agents around the state.

In a letter to insurance agents, State Auto Regional Vice President Rick Holbein and other executives cited the passage of the homeowners' reform bills enacted by lawmakers in the special session and regular session as the primary reasons for its action. The company said that despite turning a profit in seven of the past 10 years, it lost more than $14 million when taking into account all lines of insurance, due largely to the losses sustained in the 2004 and 2005 hurricane seasons. The officials also cited the likelihood that they will be unable to secure the rates necessary to cover its losses considering the provisions contained in the new property bills.

"The new law mandates that Citizens Property Insurance Corporation lower rates to what appears to be an actuarially inadequate level, while at the same time expanding the availability of its products," said Holbein. "We believe this may result in further financial stress on that company. The potential for more and larger assessments on all Florida policyholders will impact not only the purchasers of property insurance, but also those citizens who purchase other lines of coverage including automobile insurance.

"Our desire is for an appropriate, long-term solution to the insurance issues in Florida. However, Senate Bill 2498 and the political rhetoric do not provide that solution, and give the appearance that no real viable solution is being sought. This decision was not made in haste. A great deal of discussion and thought has taken place at the highest level of our organization to reach this conclusion. We appreciate your understanding and hope that you know that only a negative environment of this magnitude would cause us to follow this course of action."