State Farm Balks at Florida Withdrawal Conditions

State Farm Florida has appealed stipulations that Insurance Commissioner Kevin McCarty has put on its plan to withdraw from the state’s property insurance market.

Florida’s second largest insurer of homes and other property filed an administrative appeal that argues McCarty exceeded his legal authority by setting the conditions on the two-year phase-out plan.

The conditions include a requirement that State Farm Florida transition its homeowner policies — about 800,000 — to other private companies but not to the state-created Citizens Property Insurance Co.

Other conditions would allow State Farm agents to write policies with other companies and make State Farm Florida give up its state license within 30 days of the withdrawal plan’s approval. “We will carefully review that petition to make sure that it clearly outlines all disputed issues of material facts and meets legal sufficiency requirements,” said McCarty spokesman Ed Domansky.

McCarty has until this week to complete his review. If the petition doesn’t meet those criteria he can order State Farm Florida to resubmit it. Once approved, the appeal would go to an administrative law judge for a hearing.

State Farm contends that state law doesn’t give McCarty the power to prohibit any insurer from making a business decision to stop operating in Florida and that allowing agents to write policies for companies, with the exception of Citizens, would violate the exclusivity provision of their contracts with State Farm Florida.