State Farm to Stop Administering Federal Flood Insurance Policies this Fall

State Farm, the largest administrator of federal flood insurance policies, announced Thursday that it will stop handling flood claims and policies this fall. The decision will impact approximately 800,000 customers nationwide who have bought their coverage through State Farm. The company, which has been administering federal flood policies in exchange for administrative fees and commissions, will begin dropping policies as they come up for renewal starting October 1.

Key Takeaways:

• State Farm will stop administering federal flood insurance policies, affecting 800,000 customers nationwide.
• The company will begin dropping policies as they come up for renewal starting October 1.
• Customers will be given 90 days' notice before being redirected to another servicing agent to handle their policies.
• This decision further disengages State Farm from Florida's hurricane-prone coastline, where 40 percent of the federal program's 2.2 million policies were located as of 2008.
• State Farm will focus its resources on the coverage it does write, including property insurance.
• The decision may be particularly disruptive in Florida, which relies heavily on federal flood insurance policies.
• The Federal Emergency Management Agency (FEMA) was unaware of State Farm's withdrawal at the time of the announcement.
• State Farm has already withdrawn its own policies from storm surge zones in Florida.

Statistics:

• 800,000: Number of customers nationwide who will be affected by State Farm's decision to stop administering federal flood insurance policies.
• 40%: Percentage of the federal program's 2.2 million policies located in Florida as of 2008.
• 2.2 million: Total number of federal flood insurance policies as of 2008.
• October 1: Date when State Farm will begin dropping flood policies as they come up for renewal.
• 90: Number of days' notice customers will be given before being redirected to another servicing agent to handle their policies.

Sources:

• The Associated Press (AP) [1]
• Euclid Infotech Pvt. Ltd. [2]