Farmers to end home, auto coverage in Florida, pull back in California over natural disaster costs
Farmers Insurance will end its home, auto and umbrella coverage in Florida and curtail coverage offerings in California due to ongoing risks from environmental disaster, the insurer announced Tuesday.
In a statement shared with The Hill, Farmers confirmed it will discontinue those forms of coverage in the Sunshine State, saying “this business decision was necessary to effectively manage risk exposure.” The insurer will also curtail new homeowners’ insurance policies in California, due to “record-breaking inflation, severe weather events, and reconstruction costs,” Farmers said.
A spokesperson for Florida’s Office of Insurance Regulation (OIR) told The Hill that it is reviewing the notice, but added that it was marked as trade secret, restricting how much the office can discuss it. In the meantime, the spokesperson pointed to a state law that requires all insurers to give the OIR 90 days’ notice before discontinuing lines of insurance in Florida. Customers are entitled to 120 days’ notice.
Florida is at particular risk due to the hurricanes and tropical storms that have historically battered its coasts, while California has its own unique risks in the form of its wildfire season.
The announcement comes the month after Farmers announced it would not write new property policies in Florida due to rising catastrophe costs, while State Farm, California’s largest homeowners insurer, announced in May that it would halt new policies in the state due to catastrophe exposure. AIG, meanwhile, announced earlier it would end new policies for homeowners along Florida’s coastline.
In its announcement Tuesday, Florida projected that about 30 percent of overall policyholders in the state would be affected. Florida, in addition to its exposure to environmental risk, also has particularly high insurance rates due to a combination of fraud and lawsuits. A state law enacted at the beginning of this year creates a new property insurance backstop in the state, but it’s unclear yet how much of the problem this will offset.
Source: The Hill
