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Bennett: State Farm “running a bluff”

Posted Jun 25, 2009 by Cahterine Dolinski

Updated Jun 25, 2009 at 10:19 AM

Yesterday, after Gov. Charlie Crist vetoed a bill that would have allowed national mega-insurers charge whatever property insurance rates they wish, State Farm Florida spokesman Justin Glover said the company would have to carry on its plan to leave the Florida market. 

Sen. Mike Bennett, R-Bradenton, Senate sponsor of the bill, isn’t buying it.

Bennett has always objected to critics calling HB 1171 “the State Farm bill.” They called it that because the bill surfaced when State Farm Florida announced it was pulling out of Florida early this year, after state insurance regulators rejected its request for a 47-percent rate hike. The company told Crist this month it would reconsider if he signed HB 1171.

Bennett yesterday suggested the Legislature might override Crist’s veto, but added that he’s not convinced the veto spells the end of State Farm property insurance in Florida. He said State Farm is playing a game of chicken with the Office of Insurance Regulation.

“I think State Farm was running a bluff when it [threatened to leave]; I think the insurance commissioner was running a bluff when he what he did,” Bennett said. “I think they both lost. But I also think the Florida market is too large for them to walk away … These are smart people; I don’t thing they will leave the state of Florida entirely.”

Bennett surmises that State Farm is really looking for an opening to raise profits and lower risk by cherry-picking customers – the very thing that Gov. Charlie Crist said in his veto letter that he feared HB 1171 would encourage.

Today, Glover reiterated the insurer’s stance. “When you look at our deteriorating financial condition—we’ve lost $200 million in surplus since we filed for a rate increase last year, and the Florida company was recently downgraded by AM Best from a B+ to B—there are some serious financial realities we have to face. What’s most important to us is to meet our obligations to our current customers; that’s exactly why we have to go forward with our plan.”