State Farm Gets Approval to Leave Florida Home Market

State Farm Mutual Automobile Insurance Co., the largest U.S. home insurer, received permission to withdraw from Florida’s residential market after agreeing to transfer policyholders to other private companies.

State Farm also must consider offers to buy its operations in Florida, state Insurance Commissioner Kevin McCarty said today in a statement.

Florida regulators including McCarty are trying to limit the number of homeowners who rely on state-run Citizens Property Insurance Corp. as the nation’s largest private carriers scale back coverage to avoid the scale of losses they suffered in the record 2004 and 2005 storm seasons. The state carrier may have to borrow money to meet obligations if a major hurricane were to hit, Fitch Ratings said in a report last year.

“State Farm intended to dump all of its customers into Citizens, and that is not acceptable for their customers or for the people of Florida,” McCarty said in the statement. “We have private companies that are eager to grow their businesses, and I expect State Farm to fully cooperate in facilitating a smooth transition of their policyholders to those companies.”