Farmers Insurance Group, one of the largest insurance companies in the United States, has decided to leave the Florida market, affecting about 100,000 homeowners and 30 percent of its overall policies in the state.
The company cited risk exposure as the reason for its withdrawal, which was announced on Monday and will take effect after a 90-day notice to the state and a 120-day notice to the policyholders.
“This business decision was necessary to effectively manage risk exposure,” Farmers said in a statement.
The move comes amid a crisis in Florida’s insurance market, which is facing high costs, litigation and natural disasters. Florida accounts for only 9 percent of the country’s home insurance claims but 79 percent of its home insurance lawsuits, many of them fraudulent.
Since 2017, six property and casualty companies that offered homeowners insurance in Florida liquidated. Five more are in the liquidation process this year. Other insurance companies are voluntarily leaving the state or nonrenewing swaths of home insurance policies.
The crisis has left many homeowners with few options for affordable and reliable coverage. Some have to resort to Citizens Property Insurance Corporation, a state-run insurer of last resort that has seen its policy count surge from about 420,000 in 2019 to over 700,000 this year.
Florida lawmakers have passed two insurance reform bills this year to address the crisis and stabilize the market by reining in legal costs for insurers, limiting roof damage claims and reducing Citizens’ policy count.
“The Florida home insurance market has spent most of 2021 tumbling toward collapse, but recent legislation just might avert disaster,” Bankrate, a personal finance website, reported.
But some experts warn that the reforms may not be enough to prevent further deterioration of the market, especially after Hurricane Ian, a Category 4 storm that hit Florida in October and caused billions of dollars in damage.
“We can help you understand why the Florida home insurance crisis is happening and your options if you receive a cancellation or nonrenewal notice on your homeowners insurance policy,” Bankrate said.
Florida’s Chief Financial Officer Jimmy Patronis, whose agency oversees the Office of Insurance Regulation, expressed his concern and frustration over Farmers’ decision on Twitter.
“Don’t get to leave after taking policyholder money. Can’t write auto if you’re not doing homeowners either. Zero communication!” he wrote.
He also said his office would explore every avenue possible for holding Farmers accountable and protecting consumers. He urged policyholders to contact his office or visit his website for more information and assistance.
Relevant articles:
– Farmers becomes latest company pulling out of Florida amid property insurance crisis, ClickOrlando.com, July 11, 2023
– Farmers Insurance pulls out of Florida, affecting 100,000 homeowners, MSN, July 11, 2023
– Farmers Insurance Group leaving Florida, Wink News, July 11, 2023