State Farm has been fined $150,000 and is ordered to stop coastal non-renewals for three years following a market conduct examination in Delaware.
The Delaware Department of Insurance says it looked at the insurer's practices after it decided not to renew about 510 of its more than 127,000 policies in the state.
State Farm spokeswoman Ann Bryant tells PC360 via email that the insurer "made a very difficult decision to not renew a small percentage of policies in Delaware," and that the company must "find the appropriate balance between our exposure and the resources available to maintain a quality level of service."
State Farm, the top homeowners' insurer in Delaware, must also adjust language in its non-renewal notices, says DDOI.
The examination covered Jan. 1, 2009 to Nov. 1, 2011. The insurance department says it did not find any evidence of discrimination in State Farm's underwriting decision, but non-renewal notices the company was sending to customers "did not contain all the statutorily-required information for consumers."
The ban on State Farm's coastal non-renewals began Nov. 1, says the DDOI.
"Along with our responsibility to help our customers manage the risks of everyday life, we also have an obligation to provide timely information on non-renewals, including the reasons behind our business decisions that impact our policyholders, and their options while facing a non-renewal," Bryant adds. "We worked with the Delaware Department of Insurance during this examination and reached an outcome that protects Delaware consumers and allows State Farm to manage its business effectively."
State Farm has agreed to make sure the non-renewal notices contain the specific reason for cancelation.
The notices must also include information about how to file a complaint with the DDOI, and the insurer has agreed to "review its procedures regarding accepting and writing new business that may be contrary to its established underwriting guidelines."
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