State Farm threatens to abandon Florida homeowners

This week, the State of Florida denied State Farm's request to increase its homeowner insurance rates by more than 47 percent.  In response, the company has announced its intention to drop the 1.2 million policy holders who insure their Florida homes with State Farm; it plans to continue to write all of its other profitable lines of insurance in the state.  State Farm claims that its Florida subsidiary lost money during the tough 2004-5 hurricane season, and is taking too long to repay loans it was forced to incur with the parent company.

This financial jockeying brings to mind the recent announcement that Allstate's banking subsidiary would receive "bailout" money from the federal government, despite the fact that the parent company was reaping record profits.  We hope that the State of Florida calls State Farm's bluff, and that if State Farm goes forward with its  plan to drop homeowner coverage, its insureds return the gesture by dropping their State Farm coverage in auto, rental, business and boater fields.  The very principle of "insurance" is a concept of loss-sharing as well as profit-sharing:  a company shouldn't be allowed to pocket unconscionable profits and then distribute its losses among insureds and taxpayers.