Judge ‘Misapplied’ Trade Secrecy Law In State Farm Case, Appeal Says

Aug. 18--A judge in Tallahassee relied "solely on the testimony of State Farm's own employee" about the value of information the company wants to declare a trade secret and "misapplied" the proper definition under law, Florida regulators argued in an appeal this week.

Leon County Circuit Judge James C. Hankinson's ruling this spring would let State Farm -- and potentially every other property insurer in the state -- hide information that has been public for years about how many customers it has, or is dropping.

The trial court found only that the data had value to State Farm, but not independent economic value to others as required by law, argued Elenita Gomez and Shaw Stiller, assistant general counsels for the state's Office of Insurance Regulation.

The court "misstated and misapplied the definition of a trade secret" in Florida Statutes, they wrote in a filing Monday with the First District Court of Appeal.

Information about how many customers a company has or has dropped, statewide and in various counties, is available for virtually every Florida property insurer in a public database known as QUASR.

Since 1995, insurers have been required to file this quarterly information with the state and it has been available as public records the entire time, regulators noted.

As The Palm Beach Post reported, State Farm was once Florida's largest property insurer but dumped about half a million homeowner policies in the past half dozen years in a massive insurance crisis for the state. Insurance advertising often emphasizes themes of trust, such as being a good neighbor, but public access to data can offer another perspective -- such as when a company is canceling or not renewing policies.

By 2014, State Farm said it was "re-entering" the market but needed to keep its customer counts secret in various counties so as to avoid tipping off competitors. It declared the information a trade secret. State Farm is the only major insurer not appearing in the state database since that time.

Attempts to seek comment from State Farm were not successful. In May, a Florida spokeswoman said State Farm will no longer talk to The Palm Beach Post.

In court documents, the company maintains its "associates spent valuable time and resources to determine how to best re-enter the market and have gone to great expense to develop its plans for identifying and rating risks. Because Florida is a competitive marketplace, many competitor insurers would like to have access to State Farm's current data contained in the (state) reports, thereby potentially undermining the value of this work to State Farm."

Yet The Post found the company actually dropped about one in 10 of its remaining customers, or about 40,000, in the year after it announced it was writing new business.

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