Another major insurer exits Florida market; state CFO vows to “hold them accountable”

by | Jul 11, 2023



  • Farmers Insurance announced on Tuesday that it is discontinuing home, auto, and umbrella coverage in Florida. 
  • The insurer’s exit marks the fourth company to do so since the start of the calendar year. 
  • A spokesperson for Farmers told The Capitolist that the discontinuation solely applies to insurance issued through the Farmers distribution channel. It will continue to provide policy coverage via its subsidiaries, which include Bristol West, Foremost Signature, and Farmers GroupSelect.
  • Farmers announced last month that it would be scaling back in Florida by halting homeowner insurance coverages, citing escalating costs of reconstruction and the frequency of catastrophic events in the region. 

Farmers Insurance, one of Florida’s largest remaining insurers, announced its exit from the state’s insurance market on Tuesday, becoming the fourth company to do so this year.

The insurer informed the state that it was discontinuing home, car, and umbrella coverage in Florida, citing “risk exposure.” The revision impacts approximately 30 percent of the company’s business in Florida — close to 100,000 policies.

A spokesperson for Farmers, Trevor Chapman, told The Capitolist that the decision solely applies to insurance issued through the Farmers distribution channel. The insurer will continue to provide policy coverage via its subsidiaries, which include Bristol West, Foremost Signature, and Farmers GroupSelect. The secondary branches account for almost 70 percent of the parent company’s business transactions in Florida.

“We have advised the Florida Office of Insurance Regulation (OIR) of our decision to discontinue offering Farmers-branded auto, home, and umbrella policies in the state,” said Chapman. “This business decision was necessary to effectively manage risk exposure.”

According to the OIR, it received a market reduction notice from Farmers Insurance Group earlier this week and is analyzing it in accordance with applicable Florida Statutes. On Monday, state Chief Financial Officer Jimmy Patronis took to Twitter, claiming that his office will work to “hold [Farmers] accountable” following an alleged lack of communication.

“Hearing rumors [Farmers Insurance] might pull out of Florida,” said Patronis. “If that’s true, my office is going to explore every avenue possible for holding them accountable. Don’t get to leave after taking policyholder money. Zero communication!”

The OIR further clarified that there are statutory requirements in place to protect consumers regarding nonrenewal notices, including a requirement that mandates an insurer give 90 days’ notice in writing if it desires to discontinue the writing of any one or multiple lines of insurance in Florida. The state agency referred to Farmers’ market reduction notice as a “trade secret,” subsequently limiting disclosure of its contents.

Farmers announced last month that it would be scaling back in Florida by halting homeowner insurance coverages, citing escalating costs of reconstruction and the frequency of catastrophic events in the region.

“With catastrophe costs at historically high levels and reconstruction costs continuing to climb, we implemented a pause on writing new homeowners policies to more effectively manage our risk exposure,” a Farmers communications officer told The Capitolist in June.

The impact is particularly concerning for properties deemed uninsurable, as homeowners face exposure to significant risks and potential difficulties in selling their homes. The surge in losses, particularly from events such as hurricanes and flooding, has prompted reinsurers to increase coverage costs, including the state-backed Citizens Property Insurance Corporation, which lobbied for authorization to implement a double-digit rate increase last month.

Kin Interinsurance Network and First Community Insurance Co. also appeared before the OIR this year seeking authorization to increase rates. First Community sought an average 44.8 percent increase for homeowner multi-peril policies, while Kin filed for an average 61.5 percent increase on such policies.

Both policy writers claimed a need to raise rates following a busy hurricane season that saw billions of dollars of damage statewide.

Insurance holders in Florida will also experience a one-percent rate hike due to an emergency assessment approved by the Florida Insurance Guaranty Association (FIGA) in April. The evaluation is an additional fee charged by FIGA on its members to raise funds for the payment of covered claims linked to the liquidation of United Property & Casualty Insurance Company.

The OIR imposed a similar one percent emergency assessment on all covered lines of business except auto, meaning that all insurance companies in Florida, except for auto insurance, will also be charged the extra one percent fee.

Per the published order, FIGA is borrowing $150 million in short-term financing and will subsequently issue $750 million in revenue bonds to pay off accrued debts and outstanding claims.

It is expected that policy writers will transfer the supplementary fees to their customers, and they have been provided with an unspecified time frame to implement the one percent charge, which will continue until the bond is entirely settled.

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