State Farm is Raising Rates and Cancelling Clients in Florida

State Farm will Cancel 15% of Policies, Raise Rates 15%
"Florida’s acrimonious battle with State Farm over its effort to leave the state’s homeowners insurance market has ended with the company winning a 14.8 percent rate increase and permission to drop 125,000 policyholders."

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1 State Farm Florida is a Subsidiary of State Farm Mutual Insurance Company; statefarm.com/florida

2 State Farm Florida will remain in Florida under a negotied agreement that allows it to cancel about 15 percent of its policies and raise rates 14.8 percent"; http://www.insurancejournal.com

3 http://www.property-casualty.com/News/2009/12/Pages/State-Farm-To-Stay-In-Fla-Home-Market-Will-Cut-125000-Policies-.aspx

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Magnolia Insurance placed under state supervision

Florida insurance regulators have taken over supervision of a struggling South Florida based property insurer Magnolia Insurance.  Regulators confirmed Tuesday that Coconut Grove-based Magnolia Insurance is not finacially sound and that its president, has resigned.

Magnolia makes the fourth startup property insurer to run afoul of Florida regulators in recent months.  Magnolia Insurance began doing business in April 2008 with $20 million in capital and 60,000 policies shifted from the state supported Citizens Insurance.  Under a consent decree penned Dec. 14 by the Office of Insurance Regulation, the state will take over Magnolia Insurance, a Coconut Grove-based insurer with 100,275 policies. The receivership will last for 120 days but can be extended.

The company joins two other property insurers -- American Keystone and Coral Insurance — that have been were placed under state receivership during the past year.

Another insurer, First Commercial, has also been place under receivership. It provides workers' compensation coverage.

Sam Miller, spokesman for the Florida Insurance Council, said the vast majority of property insurers remain solid despite recent losses due to non-hurricane events. But the current environment has been too tough for some companies and industry officials are anticipating that a handful more will meet a similar fate.

"It is possible action by OIR will be necessary involving other insurers, but hopefully, the number will be limited," Miller said "OIR is moving to allow insurers to raise rates when necessary to improve their financial situations."

So far, OIR has been able to place most policyholders with other companies and not been forced to increase the ranks of state-run Citizens, the largest property insurer in the state with more than 1 million policyholders.

But financial reports for the 3rd quarter show companies experienced hundreds of millions in losses. Industry officials are expecting similar news when 4th quarter figures are released in January.

"Companies, period, are not making the profit they should be making and amassing the surpluses they should be making" (in non-hurricane years), Miller said.