ST. PETERSBURG, Fla. — Amid Florida's ongoing property insurance crisis, another company is leaving the state altogether — Farmers Insurance Group.
Last month we told you Farmers was putting a pause on writing new homeowners policies due to the increased risk of catastrophic weather. Now, the company has filed a "market reduction notice" with the Florida Office of Insurance Regulation, meaning it will no longer issue policies in the state.
The decision will impact roughly 100,000 policyholders in the state. Due to state law, Farmers will have to give 120-day notice to those they are dropping, giving folks some time to find other coverage.
In a statement, Farmers said the decision was "necessary to effectively manage risk exposure." The company also made clear that the move will only affect those with policies issued through the exclusive Farmers agency distribution channel, not through Farmers' other insurance groups.
Read the full statement below.
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. This business decision was necessary to effectively manage risk exposure. Farmers offers insurance through several different brands, and this decision applies only to policies issued through our exclusive agency distribution channel. There is no impact to 70 percent of policies currently in force for customers in the state, including Bristol West®, Foremost SignatureSM, Farmers GroupSelectSM, Foremost Choice® and Foremost®-branded policies. Such policies will continue to be available to serve the insurance needs of Floridians. Affected customers will receive notifications detailing when their coverage will end and will be advised of options for replacement coverage.
Florida CFO Jimmy Patronis has since released a statement, saying the state will hold Farmers Insurance accountable.
"I've always said that when big decisions are made on insurance – the policyholder is rarely in the room – and unfortunately Farmers Insurance proved me right," Patronis said in a statement, in part. "I have asked my team to put their heads together in holding Farmers Insurance accountable to Florida policyholders. I want additional scrutiny on this company."
He continued, "It's clear that while Farmers was making plans to exit a significant number of policies out of Florida, they were playing politics, and weren't focused on running a successful company."
Patronis also offered his contact information to Farmers, saying, "there is still time for Farmers to change course."
The pause last month came on the heels of other property insurance companies raising the costs of their premiums. Some people may see an increase of as much as 40% depending on where they live in the state.
“It’s a very difficult situation, we understand it. Unfortunately, we’re not seeing any relief shortly for Florida homeowners,” Mark Friedlander with the Insurance Information Institute said in a previous interview. “While there's been a lot of reforms put in place in recent months, passed by the state legislature, all very positive actions taken by the legislature, it takes time for those reforms to show positive trends in the marketplace."
In the meantime, the state-backed Citizens is approaching a record number of policyholders, which Friedlander says indicates people are having trouble simply finding coverage. On average Florida homeowners pay $6,000 a year for insurance, four times the national average.
“In the past 18 months we've had 15 companies stop writing new business, four companies, including farmers announce voluntary withdrawals, and we've had seven insolvencies. So ongoing volatility in the private market has led to certainly a precarious situation for many consumers," Friedlander added.
On Tuesday, Florida Insurance Commissioner Michael Yaworsky sent a letter to Farmers Insurance, saying the OIR is reviewing the notice, but "disappointed in the hastiness" of it.
Florida homeowners are not the only homeowners facing possible insurance woes. On the other side of the country, California homeowners are also learning that some insurers, including State Farm, would no longer accept new insurance policy applications for both person and business properties.
AIG exited the homeowners' insurance market in California back in January 2022, as well as Allstate, which is the fourth-largest property insurer in California more recently in June, according to Vox.
“The number of acres burned in California has grown steadily in recent years, as more people are moving into fire-prone areas of the state,” the Insurance Information Institute said in a statement. “More homes in harm’s way – combined with rising costs of repairing or replacing houses either damaged or lost to fire – leads to increased insured losses. On top of all of this are the underwriting challenges associated with public policy in the state.”
10 Tampa Bay's Andrea Chu and Claire Farrow contributed to this report.