More homeowners insurance providers are pulling back in Florida
Wild weather and rampant litigation continue to batter the Florida homeowners insurance market.
Farmers Insurance is discontinuing automobile, home and umbrella policies for Sunshine State residents, while AAA is sunsetting policies for a “very small” percentage of high-risk policies. The companies in separate statements said they’re making the moves to manage risk to meet the cost of major hurricanes and excessive lawsuits slamming the industry.
The actions follow exits by major insurers Allstate and State Farm in California. Those companies blamed exposure to catastrophes and increased construction costs alongside inflation. Lenders have said the exits won’t be the deciding factor in a purchase, but rather will deepen unaffordability.
The Florida insurers aren’t completely exiting the market. Farmers said its decision wouldn’t impact the 70% of policies in force for customers of its Bristol West, Foremost Choice, Foremost Signature and Farmers GroupSelect companies. AAA in a statement emphasized that it’s not leaving the state, but didn’t disclose the amount of policyholders its recent decision would impact.
The companies each count over 200,000 homeowners policies in Florida, according to data from S&P Global, although exact counts are uncertain. Neither firm is in the top-10 homeowners insurance underwriters in the state, according to a ranking by the Insurance Information Institute, an industry association.
Florida has the highest average property premiums in the country, with the pain coming from factors beyond bad weather. A massive amount of roofing scams, experts say, combined with favorable attorney fees, led to an onslaught of lawsuits against Sunshine State insurers. Over 250,000 lawsuits were filed just this past March against the state’s homeowners insurers, the III said, while seven companies have gone insolvent since 2022.
Florida Gov. RonDeSantis in the past year has signed three bills aimed at easing the industry crisis, although AAA in its statement said the changes would take some time to fully materialize.
The state’s metros also have some of the nation’s fastest-growing home prices, piling on top of insurance rates regularly in the thousands of dollars. The state’s Office of Insurance Regulation provides a rate comparison tool, and a search for insurance on a new construction in Miami-Dade County worth around $300,000 shows 22 insurers offering coverage between $3,960 and $16,435.
Adding to the pain is National Flood Insurance Program premiums, which critics say is unfairly hiking premiums for homeowners who are required by law to purchase the protection. Attorneys general for 10 states including Florida are suing to stop regulators’ new formula for the NFIP’s new premiums, and the lawsuit remains pending.
