LEE COUNTY, Fla. — Farmers Insurance is pulling a portion of its business out of Florida, one of many companies to do so as the state continues to battle the insurance crisis.
In a statement Fox 4 obtained, Farmers Insurance says it's stopping many of its home, auto and umbrella policies. This will impact about 30% of policyholders. Officials familiar with the situation say that's about 100,000 people.
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.
"They’re not abandoning the state. What they’re doing is shutting down one portion of their complete portfolio here in Florida," said Mark Friedlander, spokesperson for the Florida Insurance Information Institute. "We continue to see a very volatile Florida property insurance marketplace."
Word about the insurance situation started with a tweet from Florida's Chief Financial Officer Jimmy Patronis dropped on Monday.
"The market has been in such turmoil for so long that unfortunately in many cases we’re seeing the conditions get worse before ever get better," Friedlander said.
Over the past 18 months, Friedlander says 15 companies stopped writing new policies in Florida. Four have left the state voluntarily and seven became insolvent.
The domino effect is higher premiums. The III found the average price is $6,000 in Florida, which is 42% higher than last year. Friedlander says all of this trickles down to two reasons for the price hikes.
"A man-made crisis led to the market situation, what we’re seeing today," he explained. "Legal system abuse and assignment of benefits claim fraud."
The crisis is also volatile because 18 Florida insurers are on the financial health watch list, with many on it in the past.
All of these factors have led many people to seek another avenue for insurance.
"It has driven record levels of new policy holders to Citizens," he said.
Citizens is a state-led insurance company that now has 1.4 million customers.
Fox 4 asked Friedlander if the Farmers Insurance move could cause a negative impact on people without policies with Farmers.
"It should have very limited impact on other customers that don’t have Farmers Insurance," he said. "Even though it’s a significant amount of customers that will be impacted, in the big picture, it’s a very small market share."
Limited impact, though it doesn't mask our crisis. It's a crisis Friedlander is optimistic will stabilize with the first sign being Citizens slowing down its customer intake.
"Once we get to a stable market that will mean more competition," he said. "More competition means better pricing."
Farmers Insurance says affected customers will get a notification explaining when their coverage is ending and what options they have for replacement. This will take time because the Florida Office of Insurance Regulation needs to approve the company's plan.
Again, the company is not leaving the state entirely. It's only a portion of its policies will not be renewed.
