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A new deadline of July 15 has been set for settling the terms of State Farm’s withdrawal from the Florida insurance market.

Representatives of Florida insurance regulators and State Farm Florida had hoped to resolve their differences by June 15 over how the insurer may exit the state’s insurance marketplace.

However, lawyers have now been granted a further abeyance of proceedings before the Division of Administrative Hearings, which settles with state agencies, until July 15.

Administrative Law Judge Suzanne F. Hood granted the stay, which Tom Zutell,
deputy communications director for the Florida Office of Insuance Regulation, confirned was requested by both parties to the case.

The dispute stems from State Farm Florida’s announcement in January that it would begin a two-year withdrawal from the state by non-renewing its nearly one million policies, beginning with its highest risk policies.

The company said it decided to close its Florida operation after being denied homeowners insurance rate increases by the state regulator. It also said that State Farm Florida would be insolvent and unable to pay all of its claims by the end of 2011 if it does not take this action.

But Commissioner Kevin McCarty and the OIR have balked at State Farm’s withdrawal plan, terming it “hazardous” to the state and to policyholders, including those insured by the state-backed Citizens Property Å˽ðÁ«´«Ã½Ó³»­ Corp. that takes on property risks private insurers will not.

McCarty issued an order in February requiring the insurer to meet certain conditions as part of its withdrawal. He is seeking to ban State Farm from placing risks in the state-backed Citizens and to force the insurer to amend its contracts with its exclusive agents to permit them to place business with other private insurers. He also wants the insurer to surrender its certificate of authority before the withdrawal is complete.

State Farm, the state’s biggest home insurer after the state-backed Citizens, appealed the stipulations, arguing that McCarty and the OIR do not have the authority to set conditions on its withdrawal.

State Farm contends that allowing its agents to write policies for other insurance companies except the government’s Citizens would violate the exclusivity provision of their contracts with State Farm Florida.

“When people go to a State Farm Florida agent, they expect to buy a policy of a State Farm Florida affiliate,” the company said in its petition.

The company also said that losing its certificate of authority early would harm its ability to purchase reinsurance it would need during the course of the withdrawal.

Citizens is supposed to be an insurer of last resort but has become Florida’s largest property insurer with more than one million policies. State officials are concerned about adding to Citizens’ burden.

State Farm Florida is a subsidiary of Bloomington, Ill.-based State Farm Å˽ðÁ«´«Ã½Ó³»­, which will continue selling auto and life insurance in the state.