State Farm Hit With Fla. Subpoena In Battle Over Exit Plan

The Florida insurance commissioner announced yesterday that he has subpoenaed State Farm for information about home insurance policyholders, two days after the company said it will abandon the state's property market.

The request for information, said Commissioner Kevin McCarty in a statement, is a follow-up to and is part of the Office of Insurance Regulation's review of the plan for withdrawal State Farm Florida submitted on Monday.

State Farm, moved to withdraw two weeks after Mr. McCarty denied its request for a 47.1 percent average rate increase for property coverage. The company said then it was being forced to leave because of deteriorating financial conditions with its surplus (net worth or the amount by which assets exceed liabilities) declining from $820 million to $621 million since Jan. 1, 2008.

The subpoena specifically is asking for computerized data with names, addresses, policy types, policy limits and premium information for each of State Farm's Florida policyholders.

"We need to fully understand all the potential risks, so that we can properly evaluate State Farm's withdrawal plan," said a statement from Mr. McCarty.

"As we told State Farm officials Tuesday, we intend to do everything we can to help facilitate a smooth transition of their policyholders, if their withdrawal plan is approved. Understanding how the company's statewide risk is spread will help us in working to find other companies that might be willing to write policies for current State Farm customers."

OIR said State Farm is required to comply with the subpoena by Feb. 9.

A spokeswoman for State Farm Florida, Michal Connelly said the insurer will review the subpoena and "assuming it [the subpoena] requires information the Office of Insurance Regulation requires for its review, we intend to cooperate and make all information necessary available to complete that review."

According to the OIR, it has 90 days to complete its review of the withdrawal plan and if it gives approval, State Farm must then provide 180 days notice to customers before any policies can be nonrenewed.

State Farm, Florida's largest private property insurer, said that within two years its plans would have it phase out more than 1.2 million home and condominium policies.

The state-created Citizen Property Insurance Company is Florida's largest home insurer.

State Farm is not the first insurance giant to be hit with a subpoena from Mr. McCarty's office. Last year, his office ended an extended legal battle with Allstate over a wide-ranging demand for subpoenaed information that developed in the course of Allstate's request for a large rate hike.

At one point in that litigation, when Allstate did not comply with his subpoena, Mr. McCarty issued an order halting Allstate's ability to write new business in the state.