Farmers Insurance leaves Florida in latest blow to homeowners

Farmers Insurance leaves Florida in latest blow to homeowners – Tampa Bay Times

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Another insurer is leaving Florida, where homeowners are paying more than ever for insurance despite the state’s attempts to prop up the volatile market.

On Tuesday, Farmers Insurance told the state it would be eliminating home, auto and roof insurance policies across Florida, potentially affecting tens of thousands of people. It’s the fourth company to exit the Florida market in the last year — most citing rising hurricane risks. Farmers, a large company with a nationwide presence, has also reduced its new business in California, citing extreme weather conditions and the risk of wildfires.

“This business decision was necessary to effectively manage risk exposure,” the company wrote in a statement.

Farmers said the decision to exit affects about 30% of its total policies statewide, but not those issued through its subsidiaries. These – including auto insurer Bristol West and home insurer Foremost – are unaffected.

The company declined to speak publicly about how many people would lose insurance coverage. Figures from Florida’s Office of Insurance Regulation show that Farmers has about 93,000 current home and auto insurance policies, but an industry source estimates the number is closer to 100,000 now.

The day before Farmers made the decision public, Jimmy Patronis, Florida’s chief financial officer, tweeted that his office had had “no communications” with the company and vowed to “explore all possible avenues to hold them accountable for leaving Florida.” pull”.

Florida’s Office of Insurance Regulation said in a statement that the bureau was reviewing the farmers’ notice, which was sent to the bureau Monday and was marked as “trade secret,” limiting what regulators could testify.

Under state law, insurers are required to give their customers 120 days’ notice before canceling their policies. Customers who receive a notification are asked to contact their agent immediately to find alternative coverage, the bureau said in a statement.

Later Tuesday, the bureau also formally reprimanded Farmers for not pre-notifying the bureau before deciding to withdraw from the state. In a letter, Florida’s Insurance Commissioner Michael Yaworksy also noted that Farmers made the decision to leave Florida “independent” of the state’s insurance reforms.

“We are disappointed by the hasty nature of this decision and concerned at the impact this decision may have on policyholders,” Yaworsky wrote.

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“Farmers has determined that this decision affects only about 26.6% of their Florida policyholders, but any implications affecting policyholders should not be taken lightly.”

Departure despite reforms

Tuesday’s announcement follows a decision by Farmers in mid-June not to write new policies in Florida because of the skyrocketing cost of salvaging and rebuilding after a hurricane.

“With disaster costs at historically high levels and recovery costs continuing to rise, we have paused in the development of new homeowners’ policies to more effectively manage our risk exposure,” Farmers said in a statement.

Notably, Farmers didn’t mention the lawsuits, which was the number one reason Florida insurers got when asked why costs were rising so quickly. However, financial autopsies of failed insurers in Florida regularly indicate that excessive payouts, high salaries and fees to affiliates are the main problem leading to bankruptcy.

Farmers’ decision follows years of turmoil in the state’s property insurance market, sparked by a series of hurricanes beginning in 2017. Florida residents pay the highest property insurance premiums in the country, and 13 companies have defaulted in recent years. Many others have stopped writing new policies or have retired from Florida.

Gov. Ron DeSantis and state lawmakers responded by making it harder to sue insurance companies and giving them $3 billion to help them weather storm seasons. A report from the state’s Office of Insurance Regulation released last week shows that the industry broke even in the first quarter of 2023 after years of heavy losses.

But the legislation has failed to lower premiums for homeowners. According to the agency’s report, premiums continue to rise. Between November and March, Miami-Dade County tax rates increased 5% to an average of $5,665.

Hillsborough and Pinellas counties had higher rate increases at 9.5% and 9.25%, respectively. Homeowners in Hillsborough County pay an average of $2,752 and $3,210 in Pinellas County.

“Rewards go through the roof”

Floridians lead the nation in insurance costs, said Mark Friedlander, director of corporate communications at the industry-funded Insurance Information Institute.

Friedlander said the average premium in Florida was 42% higher year-over-year and well above the national average premium — $1,700.

“It’s brutal,” said Vince Perri, head of Key Biscayne-based public claims firm Elite Resolutions. “The bonuses go through the roof. It’s always been high here, but now it’s worse.”

Perri, who has been in the business for more than a decade, said he sees the back-to-back storms of recent years as a key factor in rising prices. Hurricane Ian was Florida’s costliest storm last year, causing more than $109 billion in damage statewide.

If Florida goes a few more years without a hurricane, Perri believes insurance costs will come down again, Perri said.

“It will take a few years for the market to settle down again,” he said. “I think insurance premiums are going to be high for a while.”