A request by State Farm Florida to eliminate many of the discounts the company offers to its policy holders, including a discount for having a monitored alarm system on the property, has been approved by the Florida State Office of Insurance Regulation (OIR). Other discounts being cut include Claim Record Rating, Utilities Rating, Building Code Effectiveness Grading System and Home/Auto discounts. The removal of the discounts amounts to a 28.4 percent rate increase for State Farm Florida customers, according to the OIR.
According to statements made by State Farm Florida President Jim Thompson in a message to the company’s Florida customers, “We are making these adjustments to our discounts so that State Farm Florida may gain much needed revenue to help slow its financial deterioration and better ensure it can fulfill its obligations to its customers as it proceeds toward withdrawal. State Farm Florida’s net worth has fallen over $300 million since year end 2007.”
State Farm Florida had previously stated that it planned to withdraw from the Florida property insurance market pending approval by the OIR. This will still occur even with the approved elimination of the policy discounts and increased revenue. Supposedly, the company’s residential property policyholders will receive at least six months notice before their policy is affected.
The changes will take affect beginning November 1 of this year for new customers and December 1 for renewing customers. State Farm Florida stated that it will send renewal letters 100 days in advance of policy renewals, informing customers how their premiums will change under the new policy.
State Farm will also continue to market other insurance products in Florida, such as auto and life insurance, as well as financial services products.
Currently, only State Farm Florida has requested this change in policy.