State Farm on the Fence in Florida
March 26th, 2009 by Jeb Foster
State Farm has been trying since January to get out of the property insurance business in Florida (really, who can blame them?). But it turns out that such a move is easier said than done.
Florida’s Office of Insurance Regulation (OIR) issued a set of conditions for State Farm’s withdrawal, and there’s one condition in particular that has become a sticking point. In essence, the OIR would like to free State Farm agents from captivity and allow them to sell policies from other insurers.
“That’s not something we’re willing to do because that’s in direct conflict with our business model,” State Farm spokesman Chris Neal told the Tampa Tribune. “It’s been a very successful business model.”
You can’t argue that it has been a successful business model, but I’m scratching my head about State Farm’s reluctance to give their agents the freedom to sell from carriers. In this month’s issue of the Property Insurance Report (subscription required), Brian Sullivan opined that customer service and potential damage to the State Farm brand were likely concerns.
But Florida insurance officials see a larger problem if these agents aren’t set free: the already precarious state-run insurer would have to shoulder more risk.
“If those agents are not allowed to write new business for companies other than State Farm and Citizens, that leaves Citizens as the only alternative,” said OIR spokesman Ed Domansky. “That’s just not acceptable.”
As always, readers, your thoughts are welcome. Leave a comment below.
Tags: State Farm
