Progressive to exit more property insurance business in Florida

Florida’s property insurance market continues to face challenges from a reduction in appetites, among many major insurers, to write property business in the state, with Progressive the latest to be reported to be pulling back.

According to local news source WFLA, Progressive confirmed that it will not be renewing around 100,000 homeowners property insurance policies in Florida, the second time it has elected to non-renew a block of business there.

A Progressive spokesperson told the news company that the required regulatory filings are underway and it expects to send out its first non-renewal notices in December this year.

The non-renewals of homeowners insurance policies are expected to go into effect in May 2024 and thereafter continue on a rolling 12-month basis.

The changes are expected to affect DP3 (dwelling/fire) policies as well as other Progressive “direct and agency property policies,” the spokesperson of the insurer told WFLA news.

Research from the Insurance Information Institute (III) suggests around 100,000 policyholders will be affected by the non-renewals, which WFLA says is circa 50% of Progressive’s current policies in Florida.

The III said that 47,000 DP3 policies, typically related to secondary residences, will be non-renewed, as well as 53,000 policies for properties considered to be higher-risk.

As with all the moves we’ve seen and reported on where major carriers are pulling-back in catastrophe and severe weather exposed regions, Progressive cited exposure management as a driver.

“Florida property remains an important part of our Progressive Home business, and we have no plans to leave the state,” the insurers’ spokesperson explained to WFLA. “However, we have been working collaboratively with state officials and the Florida Office of Insurance Regulation to implement changes that allow us to rebalance our exposure while continuing to serve Florida homeowners.”

WFLA reported that affected polciyholders will be offered replacement policies through Loggerhead Reciprocal Interinsurance Exchange.

It’s assumed that those not taking up that option will look elsewhere, or likely fall into Citizens.

Progressive’s spokesperson added, “The actions we’re taking are necessary to ensure that we can continue to write business in Florida in a meaningful way — and we expect these actions will better position us to build a stronger, more stable, and more competitive Progressive Home business for consumers and independent agents in the long run.”

The III also found that Progressive non-renewed a further 56,000 policies last year, WFLA reported.

As we’ve explained before, the broad opinion in the industry is that the outlook for the Florida marketplace has improved and that legislative reforms, while taking time to bed in, will eventually deliver benefits to insurers operating in the state.

But, those reforms won’t impact the insured exposure levels in the state, which as we reported recently have been growing rapidly.

Which is the same cause and effect being seen across other regions of the United States.

Carriers are concerned that rates have not been able to keep up with exposures and with nervousness over weather and catastrophe event frequency and occurrence severity, with climate change a factor, all coming at a time of significant price increases for reinsurance, the pull-back continues in the most catastrophe exposed regions.

Farmers is among those to pull-back in Florida and California, while State Farm pulled-back in California, AIG in some catastrophe exposed areas, and Nationwide pulled-back from some North Carolina wind risk and is pruning other areas of its property book as well.

This is not solely a Florida issue, or even Florida and California, those are just the two most prominent and obvious states where catastrophe exposed property insurance carriers have suffered the most in recent years.

But the effects of exploding exposure levels, alongside higher losses, in an environment where rates have not kept pace and now reinsurance has become so costly, is all adding up to a significant rethink as to where capacity is deployed and in what quantities.

These shifts are set to continue and all the while there are carriers pulling-back, there are others stepping in to specialise in catastrophe exposed property insurance business.

If rates keep increasing and the major carriers can get comfortable that they are compensated for the risk in these areas, we will likely see a resumption of their growth in states like Florida and California.

But for now, we should expect more exits, pull-backs and adjustments to exposure levels there, until the market finds an equilibrium that allows a more sustainable resumption of exposure and policy growth there.

Read all of our news and analysis on the Florida insurance and reinsurance market.