Florida Record

Monday, February 24, 2020

Court to hear appeal in State Farm 'trade secret' dispute

By Glenn Minnis | Dec 19, 2016

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FORT LAUDERDALE – A three-judge panel is slated to hear appeal arguments just after the new year in the simmering “trade secrets” dispute between State Farm Florida and state insurance regulators.

At issue is a recent verdict rendered by 2nd Judicial Circuit Court Judge James Hankinson where he issued an injunction blocking the public release of information pertaining to the insurance behemoth’s property-insurance policies.

Recently appointed state insurance commissioner David Altmaier immediately challenged that ruling, setting the stage for appeal proceedings to commence on Jan. 19.

During the initial proceedings, attorneys for State Farm successfully argued that the information in question should be considered part of the company’s inner-workings and thus safeguarded from all public disclosure.

What’s at stake is the public release of quarterly reports filed and kept by State Farm that reveal such findings as the number of policies the company has on record at the end of each month, the total number canceled and not renewed and the number of new policies written.

For the last 20-plus years, insurers across the state have been required to make such information available on a quarterly basis. From there, it has been made publicly stored in a database known as Quarterly Supplemental Report (QUSAR).

Many insurance advocates use the data stored in the system to advise customers and agents about which providers are best serving what areas of the region.

“State Farm is being a bad actor in all this,” Jay Neal, Florida Association for Insurance Reform (FAIR) president and CEO, told the Florida Record. “Once they became vulnerable to criticism for trying to change legislation without writing any new posts, they invoked trade secret policy.”

In appealing Hankinson’s verdict, state regulators contend the judge erroneously based his decision “solely on the testimony of State Farm’s employees,” a development they characterize as a gross misapplication of state law, according to the brief.

If the verdict is allowed to stand, state officials contend it will allow State Farm and every other property insurer the right to hide such critical information as the number of customers it has and the number it is has dropped for whatever reason.

Neal sees such a development as an unfair advantage.

“The public has a right to know,” he said. “It’s part of the public trust.”

State Farm once reigned as Florida’s largest property insurer, but in recent times the company has moved to dump roughly half a million homeowner policies, creating what has amounted to a crisis-situation for the state.

As recently as two years ago, State Farm officials pledged the company was set to re-enter the market, but insisted it needed to be strategic in doing so and keeping customer count information out of the hands of potential competitors was part of the plan.

At least part of that contention runs counter to the findings of a recent investigation which concluded that since making its writing new business claims in 2014 the company has dropped about 40,000 patrons, or roughly one in 10 of its remaining customers.

Currently, the company is the only major insurance provider in the state not to share information in the state run database.

Meanwhile, State Farm spokesman Michal Bower noted that even as the company seeks to keep all the disputed data in-house, it is still reporting all the information to the state in keeping with the regulatory process, the Sun Sentinel reports.

As for all the pending litigation, Neal added, “I think the argument is strong for appeal. I will leave to the attorneys how best to advocate all the part of policy holders.”

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Florida Association for Insurance Reform