Appeals Court Affirms State Farm Denial For Increase

NU Online News Service, July 21, 4:04 p.m. EDT

A Florida appeals court affirmed an administrative judge's ruling that allows the state's Insurance Commissioner Kevin McCarty to deny a homeowners insurance rate increase to State Farm.

Without comment, Florida's District Court of Appeals, First District, in Tallahassee, yesterday affirmed the commissioner's denial. A reverse decision could have increased rates by as much as 67 percent.

In December, Administrative Law Judge Daniel Manry ruled that the insurer had not shown sufficient need for an increase.

In a statement, Mr. McCarty said, "We are very pleased with the District Court's ruling. State Farm knew, or should have known, that the filing it made was contrary to the Legislature's intent and could not be approved. State Farm's actions suggest that it intended to use the denial of the filing as a pretext for threatening to withdraw from the Florida property insurance market."

The ruling is not final until time expires for State Farm to file a motion for rehearing, the department said. The carrier has 15 days to file for another hearing.

The department said issues with State Farm's proposed withdrawal plan still remain unresolved. Both the office and State Farm officials are continuing discussions, but the department has set a hearing to begin Oct. 12.

Bloomington, Ill.-based State Farm, the largest private insurer of homeowners' risk in the state, decided it would leave the state in February after it was denied the increase.

State Farm spokesman Chris Neal said the company was, "of course, disappointed" and it has not decided whether it will appeal the decision.

Mr. Neal described negotiations between the department and the company "as going well," and the company has "no reason to believe" that continued discussions would not be productive.

In other news, Florida's Office of Insurance Regulation and the United Kingdom's Financial Service Authority have signed a memorandum of understanding that formally commits the two to work together "on sharing critical information and coordinating regulatory duties about insurance issues that could affect consumers" in both nations.

The agreement follows a similar one with German regulator BaFin announced on June 22.