Florida orders State Farm to refund $120 million

MIAMI, Sept 9 (Reuters) - State Farm must issue $120 million worth of credits or refunds to policyholders who did not receive state-mandated discounts for strengthening their homes against wind damage, the state insurance commissioner ordered on Tuesday.

State Farm also must pay a $1 million penalty to the Florida Insurance Regulatory Trust Fund, Florida Insurance Commissioner Kevin McCarty said.

A state law in effect since 2005 requires insurers to tell customers when home policies are issued or renewed that they are eligible for discounts if they have made modifications to reduce damage from hurricanes.

McCarty said his office notified State Farm in July that it was investigating whether the company, a large mutual insurer, had properly implemented the program. As a result, he said, the company identified 98,000 current or former policyholders who will receive credits or refunds.

"I am very pleased that State Farm policyholders will now be getting the appropriate monetary credit for the important wind mitigation devices they put on their homes," McCarty said. "Everything Florida consumers can do to reduce storm damage helps to keep property insurance costs down."

The company has 365 days to issue the credits and pay the refunds, which must include 7 percent interest on the amount due, McCarty said. (Reporting by Jane Sutton)