TALLAHASSEE, Fla._An appeals court has backed a decision by state regulators rejecting State Farm's request to hike Florida property insurance rates by 47.1 percent.

The Office of Insurance Regulation said Tuesday that the 1st District Court of Appeal affirmed Insurance Commissioner Kevin McCarty's order that rejected the rate hike request from State Farm. The court did not give a reason for its 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. "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."

State Farm has 15 days to file a motion for a rehearing.

"We're disappointed with this opinion," State Farm spokesman Chris Neal said. "We haven't decided what our next course of action will be."


McCarty's order was based on a recommended order in December by an administrative law judge, Daniel Manry, who agreed with the initial denial of State Farm's indicated statewide requested increase in August 2008. Manry said State Farm Florida did not show that its requested rate was not excessive.

The Illinois-based insurance giant announced plans in late January to withdraw from the property insurance market in Florida. The insurer said it has been unable to obtain regulatory approval from Florida officials to charge adequate rates for its property insurance for homeowners, renters and others who own condominiums, boats and businesses.

State Farm Florida is the state's largest private homeowners insurer with some 1.2 million customers. Its 2.8 million auto customers and those with life and health insurance policies in Florida were not affected by the company's decision to withdraw from the property market.

State Farm Florida was established in 1998 as a subsidiary of State Farm Mutual Automobile Insurance Co.