A Florida court has sided with state officials in their denial of rate increases for State Farm, which plans to discontinue its coverage of Florida policyholders.

Kevin McCarty

The First District Court of Appeals affirmed a Jan. 12 final order by Florida Insurance Commissioner Kevin McCarty, denying an increase in homeowners’ policies. McCarty and a state administrative law judge both denied State Farm’s requested statewide rate increase of 47%.

In a previous order, Administrative Law Judge Daniel Manry of the Florida Division of Administrative Hearings found “State Farm Florida did not show by a preponderance of the evidence that either the indicated rate or requested rate in the rate filing is not excessive, inadequate, or unfairly discriminatory.”

McCarty said he is “very pleased” by the court’s ruling affirming his decision.

“State Farm knew, or should have known, that the filing it made was contrary to the legislature’s intent and could not be approved,” McCarty said in a statement. “State Farm’s actions suggest that it intended to use the denial of the filing as a pretext for threatening to withdraw from the Florida property insurance market.”

In January, State Farm Florida, the state’s largest property-casualty insurer, announced its intent to discontinue coverage in the state, citing a “substantially weakened financial position” directly related to its inability to obtain regulatory approval for what it felt was adequate rates.

As a hedge against future losses, a number of property-casualty insurers have been seeking to raise rates or abandon coverage completely in coastal areas prone to hurricanes and tropical storms since Hurricane Katrina in 2005.

State Farm can file a motion for rehearing with the district court within 15 days of the decision. Meanwhile, a hearing between the department and State Farm officials to discuss the insurer’s withdrawal from the state is scheduled to begin Oct. 12.