In yet another blow to Florida homeowners, Farmers Insurance announced this week that it will drop policies for around 100,000 customers across the state. The decision is the latest evidence that state reforms have failed to stabilize the troubled property insurance market.
Farmers said it will not renew home, auto, and umbrella policies covering roughly 26.6% of its Florida customers. The company cited the need to "effectively manage risk exposure" in a statement.
The announcement comes just weeks after another major insurer, Florida Peninsula Insurance Company, announced that it would be exiting the state altogether. This is the latest in a series of departures from the Florida market by insurers, who have been struggling to keep up with rising claims costs.
The state's property insurance market has been under strain for years, due to a number of factors, including the increasing frequency and severity of hurricanes. In recent years, insurers have also been hit with a wave of lawsuits from homeowners who allege that their policies did not adequately cover damage caused by storms.
In an effort to stabilize the market, the Florida Legislature passed a number of reforms in 2021. However, these reforms have not yet had a significant impact, and many insurers are still struggling to make a profit.
The decision by Farmers Insurance to drop policies for 100,000 customers is a major setback for the state's property insurance market. It is likely to lead to even higher rates for homeowners, and it could make it even more difficult for people to find affordable coverage.
Jetson LX10 Folding Electric Bike
Jetson LX10 Folding Electric Ride-On - Includes Easy Folding Mechanism, 250 Watt Motor, Top Speed of 15.5 mph, Twist Throttle, 10" Wheels, With Pegs, Black
Amazon Fire 7 Kids tablet, ages 3-7.
Smart TV Under $100
Toshiba 32-inch Class V35 Series LED HD Smart Fire TV $99.99
INSIGNIA 32-inch Class F20 Series Smart HD 720p Fire TV (NS-32F201NA23, 2022 Model) $89.99
Here are some additional details about the decision by Farmers Insurance:
The affected policies were all issued through Farmers' exclusive agency distribution channel.
The non-renewals will take effect over several months, beginning in August 2023.
Customers who are affected will be notified by mail and will be given the opportunity to purchase coverage from another insurer.
Farmers Insurance is the third major insurer to announce that it will be exiting the Florida market in recent months.
The decision by Farmers Insurance is a sign that the state's property insurance market is still in a state of crisis. It is unclear what the long-term impact of this decision will be, but it is likely to make it even more difficult for homeowners to find affordable coverage.
But what Farmers didn't specify was that sky-high claims costs, excessive lawsuit payouts and high administrative fees are the real drivers forcing insurers out of Florida. Financially struggling companies often have excessive overhead that eats into profits, leaving them vulnerable during storm seasons.
The move comes despite changes passed by Gov. Ron DeSantis and the Legislature meant to shore up the market. But insurance rates continue to climb sharply - up 5% to 9.5% in the first quarter alone, far outpacing the national average of $1,700. Many Floridians now pay over $5,000 annually.
Critics argue the reforms focused on the wrong issues, prioritizing culture war bills over solutions Democrats proposed like a state-run insurer and reinsurance fund.
Farmers' exit leaves 100,000 customers searching for new coverage in a depleted market with few options and astronomical prices. Many vulnerable homeowners will likely struggle to find an affordable policy - if they can find one at all.
For years, Florida homeowners have faced ballooning rates even as insurers raked in massive profits. As more insurers abandon the state, the onus is on DeSantis and lawmakers to finally take meaningful action that addresses the root problems driving the crisis. If not, millions more Floridians risk losing any ability to insure their homes and property.
Floridians deserve solutions that stabilize the market and make insurance policies affordable and accessible again. It's time for Florida's leaders to step up before more insurers bail - and leave even more homeowners high and dry.
