Farmers becomes latest company pulling out of Florida amid property insurance crisis

Farmers notified Florida officials Monday

ORLANDO, Fla. – Farmers Insurance is leaving the Florida insurance market, becoming the latest company to do so, and impacting thousands of policyholders.

The Florida Office of Insurance Regulation confirmed to News 6 that Farmers notified the agency Monday of its intentions. The notice has been marked “trade secret” which is limiting the ability of insurance regulators to give more details.

Farmers said that only Farmers-branded insurance products are being ended in Florida, which account for roughly 100,000 auto, home and umbrella policies.

Other insurance companies run by Farmers will stay in the Florida market, including Bristol West, Foremost Signature, Farmers GroupSelect, Foremost Choice and Foremost-branded policies, which account for about 70% of Farmers Insurance customers in the state.

Last month, News 6 reported that Farmers Insurance stopped writing new property insurance policies in February. In a statement, Farmers said it paused writing property insurance policies to “more effectively manage our risk exposure.”

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An agent for Farmers told News 6 that the company was looking at whether to leave the market within the next 30 days.

“There’s supposed to be news about what the state of Florida is going to bring and whether Farmers is going to stay or go and what they’re gonna do with agents,” the agent said.

Farmers issued the following statement to News 6 Tuesday:

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.

Farmers Insurance spokesman

Florida Chief Financial Officer Jimmy Patronis, whose agency oversees the Office of Insurance Regulation, tweeted Monday that he was hearing rumors that Farmers might pull out of Florida and said his office would “explore every avenue possible for holding them accountable.”

A Farmers spokesman would not comment on Patronis’ tweet.

In a letter to the company’s head of regulatory strategy and analytics, Florida’s Insurance Commissioner Michael Yaworsky expressed his disappointment, not only at the decision but at the way it was communicated.

“We are disappointed by the hastiness in this decision and troubled by how this decision may have cascading impacts to policyholders,” Yaworsky wrote. “Farmers has noted this decision only impacts about 26.6% of their Florida policyholders, but any impact which impacts policyholders should not be taken lightly.”

Yaworsky said Farmers’ representatives promised an efficient effort to move policyholders to other companies during the transition, saying he would hold them to that promise.

What does this mean for insurance policyholders?

Florida law requires an insurance company to give a 90-day notice in writing to the state if it plans to discontinue services. Farmers Insurance is not allowed to send out nonrenewal notices until that 90-day period has lapsed.

The company is also supposed to give a policyholder a 120-day notice before the date their insurance ends, so they have time to find new insurance coverage.

In the meantime, customers can still contact their agent or call the national claim number if they need help at 1-800-435-7764.

That might be cold comfort for policyholders, however, as the market for insurance policies continues to reel from high prices and fewer companies writing policies.

In a series of special sessions, Florida lawmakers tried to address the issue and stabilize the market by reining in legal costs for insurers. That includes providing $3 billion in reinsurance aid to help the market and a law that ends homeowners’ ability to recover attorney fees when they prevail against insurance companies.

“Most of the primary cost drivers in the Florida property insurance market, including catastrophic claims, adverse loss reserve development, and higher reinsurance costs, are notably exacerbated by excessive and costly litigation. These historic and unprecedented legislative reforms in recent years addressed these cost drivers to bolster Florida’s property insurance market and create stability and competition by reducing costly litigation,” the Office of Insurance Regulation said in a statement.

Florida lawmakers had said the benefits of the new laws would not be seen right away, but eventually, insurance rates would come down.

In his letter to Farmers, Yaworsky wrote that it appeared Farmers made its decision despite those efforts.

“Based on the discussions we have had with your company today; we understand that this decision was made independently of these reforms going into effect as part of a broader series of actions Farmers is making across the country and not solely focused on Florida,” Yaworsky wrote.

Farmers first started selling insurance in Florida in 2018, but the agent who spoke to News 6 believed the company did not enter the market with “sound actuarial guidelines.”

“To me, (Farmers) didn’t know what they were doing when they came into the state,” the agent said. “All the other companies have market restrictions.”

Not helping is a new report showing property catastrophe reinsurance rates rose 30% to 40% on July 1. Reinsurers insure insurance companies and higher reinsurance rates can mean higher premiums for insurance customers.

The instability in the market has left many homeowners with no choice but to go to Citizens Insurance, the state’s insurer of last resort. Citizens now insures more than 1.3 million Floridians.

Citizens is also hoping to drop property insurance policies by increasing insurance rates by 13.1%, according to a hearing held last month.

State Rep. Spencer Roach, R-North Fort Myers, tweet replied to Patronis Monday that he had the solution to the insurance crisis, teasing the regular legislative session next year.

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About the Author:

Christie joined the ClickOrlando team in November 2021.