Farmers Insurance reduces policies amidst Florida’s volatile insurance market.
Florida’s Homeowners Insurance Market Faces Challenges as Farmers Insurance Discontinues Policies
Florida has seen a significant influx of people moving from other states in recent years. However, this population growth has come with a downside – the average price of homeowners’ insurance premiums has skyrocketed. The situation took another hit when Farmers Insurance announced its decision to discontinue various home, auto, and umbrella policies in the state. This move is expected to further complicate an already turbulent homeowners insurance market in Florida, despite efforts by lawmakers to stabilize it.
“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,” Farmers Insurance spokesman Trevor Chapman told the Washington Examiner in a statement.
While this discontinuation will not impact 70% of the policies currently in force for customers in the state, it does raise concerns about the overall stability of the Florida homeowners insurance market. Farmers Insurance assured that policies issued through other brands will still be available to serve the insurance needs of Floridians. Affected customers will receive notifications regarding the end of their coverage and will be provided with options for replacement coverage.
The withdrawal of policies by Farmers Insurance is just the latest obstacle in a troubled homeowners insurance market that shows no signs of immediate stabilization. Mark Friedlander, the director of corporate communications for the Insurance Information Institute, explained that the soaring premiums in Florida are not solely due to the threat of hurricanes.
“Yes, Florida is prone to hurricanes more than any other state, understandably a high-risk state, but no other state faces man-made factors like Florida does. Yes, there are fraud issues in other states, there are some legal system issues in other states, nothing along the lines of Florida,” Friedlander told the Washington Examiner.
The crisis in Florida’s homeowners insurance market stems from excessive litigation of insurance claims, which is facilitated by long-standing laws in the state. Friedlander highlighted that this excessive litigation has led to the insolvency of seven regional insurers in the past year and a half. He emphasized that Florida consumers are paying the highest average premium in the U.S., with costs reaching an average of $6,000, a 42% increase from last year and a cumulative 100% increase over the past three years.
Another issue plaguing the market is the dominance of the state’s insurer of last resort, Citizen, which is 100% larger than any other insurer in Florida. Friedlander sees this as a clear sign of distress in the private insurers market. While he commended the actions taken by elected officials in Florida to address some of the underlying causes of the crisis, he acknowledged that it will take a long time to fully recover from the turmoil that has plagued the market for years.
Jeremy Redfern, the governor’s press secretary, pointed to the legislative efforts made in recent years to curb excessive litigation and stabilize the insurance marketplace. Various pieces of legislation, including SB 76 and Senate Bill 2D, have been enacted to address attorney fees, claims response, and the assignment of attorney’s fees in property insurance cases. However, Friedlander cautioned that the backlog of cases filed prior to these reforms, along with other ongoing issues, means that the problem will persist for some time.
Despite the progress made, Friedlander expressed uncertainty about when the insurance market in Florida will improve. He emphasized the interference and outstanding issues that make it difficult to predict a timeframe. In the meantime, Florida consumers continue to suffer from escalating prices.
Click here to read more from the Washington Examiner
" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
*As an Amazon Associate I earn from qualifying purchases
Now loading...