Court weighs State Farm trade secrets

By JIM SAUNDERS
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, January 19, 2017.......... An appeals court Thursday dug into a dispute between regulators and State Farm Florida about disclosure of information that shows where the company is selling property-insurance policies.

The Office of Insurance Regulation took the case to the 1st District Court of Appeal after a circuit judge last year backed State Farm's arguments that the information is shielded from public release because it includes trade secrets.

Insurers have long been required to file the information, which includes by county how many policies are written, canceled or non-renewed, through a database known as the Quarterly and Supplemental Reporting System, or QUASR. But State Farm sought trade-secret protection for its data as the company began renewed efforts to write homeowners' policies in Florida in 2014 after a period in which it did not write new coverage.

Karen Walker, an attorney for State Farm, told a three-judge panel of the appeals court that the information could be valuable to State Farm's competitors, who might use it to glean information about State Farm's marketing strategies in different counties.

"We know that companies are out there looking at QUASR data, using it for economic reasons," Walker said.

But Elenita Gomez, an attorney for the Office of Insurance Regulation, said other insurers have not requested trade-secret protection for the information and that State Farm had not requested it before 2014. She said State's Farm's attempt to shield its information from disclosure would limit regulators' ability to provide valid data and reports to the public, the Legislature and the governor.

The three-judge panel, made up of judges Timothy Osterhaus, Allen Winsor and Harvey Jay, did not indicate how it would rule. But the judges' questions at times during the hearing appeared to indicate skepticism about the Office of Insurance Regulation's position.

Leon County Circuit Judge James Hankinson ruled in May that State Farm's information should be protected as a trade secret and issued an injunction against regulators releasing it. Hankinson wrote that a disputed issue was "whether QUASR data has value. The court finds that there is value to the QUASR data. … Accordingly, plaintiff (State Farm) has shown, by a preponderance of the evidence, that the QUASR data meets the definition of trade secret."

As an example of the way the data is used, the Office of Insurance Regulation on Nov. 28 posted reports online that listed the top 25 property insurers by the numbers of policies in place as of Sept. 30 and the amounts of premiums written. The report ranking insurers by the numbers of policies also gives information about new policies and policies that were canceled or not renewed.

The documents include footnotes saying that beginning "with the first quarter of 2014, State Farm Florida Insurance Company is filing QUASR reports as trade secret, their current data is therefore not included in this database."