State insurance regulator to challenge State Farm records secrecy bid

May 19--In one of its first acts under new Commissioner David Altmaier, Florida's Office of Insurance Regulation will appeal a judge's order that lets State Farm -- and potentially every other property insurer in the state -- hide information that has been public for years.

Regulators expect to appeal by June 1 a ruling by Leon County Circuit Judge James C. Hankinson. The four-page order troubles consumer advocates, who told The Palm Beach Post they see a failure to address the public interest in maintaining open access to data about how many customers an insurer has -- or is dropping.

"Obviously the public interest in open data must be given weight and voice in any fair review of an insurer's claim of trade secret status," said J. Robert Hunter, director of insurance for the Consumer Federation of America. "The public has a right to be able to review data that might disclose redlining or other unfair practices. Insurers, in my experience, want everything to be secret. I have seen newspaper articles labeled as secret by insurers."

It is "still hard to understand how information that had routinely been public could transform into a trade secret," said Birny Birnbaum, executive director of the Center for Economic Justice in Texas. "At best, it shows that demonstration of a trade secret is trivial and the overly broad trade secret exemption to public information laws undermines public accountability."

State Farm said it will no longer talk to The Palm Beach Post because of its coverage of the issue.

"Thank you for reaching out, but unfortunately due to your consistent approach of continuously writing negatively about State Farm in your news stories, we are no longer responding to your inquiries," spokeswoman Michal Brower said.

State Farm failed to get a ruling it wanted on the issue nearly a decade ago, but in one stroke, the judicial order could wipe out public access to information about insurance companies statewide -- if it stands and competitors follow suit.

Judge Hankinson indicated he was ruling in favor of the company in March, but his written order was not filed until May, records show.

If the ruling stands, there may be little to stop other property insurers from turning off public access to information submitted to the state's Quarterly and Supplemental Reporting System. The system shows, quarter by quarter, how many policies a company has statewide and in individual counties, and how many policies it has canceled or not renewed.

"To cut off access to critically important information -- information that has been publicly available for years -- about the insurance industry leaves the public in the dark about an issue that is of critical concern to property owners across the state," Barbara Petersen, president of the First Amendment Foundation, said in March.

In court filings, the company argued it should be allowed to declare that information a trade secret to avoid informing competitors about its marketing strategy.

In the case initially filed in 2014, 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."

As The Post reported, State Farm said it was "re-entering" the Florida homeowner market but dropped more than 40,000 customers, or more than 10 percent, in the year following that, leaving it with about 348,000 at the start of 2015. That was still enough to rank among the state's top three property insurers.

State Farm was once Florida's largest property insurer but has shed about half a million homeowner policies in the past half dozen years during a major insurance crisis for the state. Insurer advertising often emphasizes themes of trust, such as being a good neighbor or leaving a consumer in good hands, though public access to data can show another picture -- such as when a company is canceling or not renewing policies in a particular market.

By the end of 2013, State Farm had fewer than 13,000 home insurance customers left in Palm Beach County compared to more than 50,000 four years earlier, state records showed. State Farm went off the grid in public records after that, heading to court to defend the trade-secret status it declared for itself.

Customer perception can matter, not just for home insurance but auto and other business. James Savage of West Palm Beach, for example, said he was a State Farm customer for nearly four decades, made recommended property upgrades and never filed a storm-related claim, yet the company dropped him.

"State Farm should be banned from the state or at least from the South Florida area from selling either auto, property insurance or investments," Savage said. "Is it possible to hate State Farm? You bet!"

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