TALLAHASSEE, Fla. - State Farm Insurance and the State of Florida reached a $46 million settlement Tuesday that ends allegations State Farm unfairly treated its policyholders.
Florida Attorney General Bill McCollum and the state's Office of Insurance Regulation agreed to the settlement, which provides approximately $23 million in refunds and a $23 million adjustment in homeowner rate charges.
"The insurance industry must take responsibility for ensuring policyholders are treated fairly," McCollum said. "This settlement helps achieve that."
The State alleged State Farm did not automatically notify its policyholders who were eligible to transfer from their more expensive policies with one of State Farm's companies to cheaper policies with the other.
McCollum says approximately 35,000 people will save between $100-$200 per year when they switch from State Farm Fire and Casualty Co. to State Farm Mutual Automobile Insurance Co.
Also, State Farm must pay $1 million for attorneys fees to McCollum's office, and another $500,000 to the OIR.
Florida and insurance companies have not been on very friendly terms since Gov. Charlie Crist began extensive regulations of the industry that began in earlier this year. Those measures prevented insurance companies from dropping policyholders until after this year's hurricane season.
The state-run Citizens Property Insurance, once the insurer of last resort and now the largest in the state, has a $432 billion exposure to risk, according to a report by The Associated Press.
McCollum said he has been advising Crist, the former Attorney General, on insurance matters. A copy of the settlement can be found here.