Farmers Insurance Further Reducing Florida Business

One month after it announced it would stop writing new homeowner policies in Florida, Farmers Insurance now says it plans to cut back further on its presence in the hurricane-prone state.

The Florida Office of Insurance Regulation said Tuesday that it had received a “market reduction notice” from Farmers Insurance Group on Monday, July 10. But the information was marked as trade secret, per Florida insurance statutes, so details were not provided.

“We have advised the Florida Office of Insurance Regulation of our decision to discontinue offering Farmers-branded auto, home, and umbrella policies in the state,” Farmers’ director of public relations, Trevor Chapman, said in a statement Tuesday. “This business decision was necessary to effectively manage risk exposure.”

Two Florida insurance agents for Farmers told Insurance Journal on Tuesday that they could not comment and referred all calls to Farmers’ corporate public information office.

It’s likely the move will mean non-renewals for thousands of affected policyholders, but the exact number is unclear. Chapman said Farmers has several brands in Florida and the withdrawal will not affect policies issued through its subsidiaries — auto insurer Bristol West, home insurer Foremost, Foremost Signature, Farmers GroupSelect, and Foremost Choice, which include about 70% of the group’s policies in the state.

News reports from around the state noted that the pullout could affect as many 100,000 homeowner, auto and umbrella policies, but the OIR’s quarterly report shows Farmers’ policy count may be less than that.

State law requires insurers to give OIR 90 days notice when it plans to stop writing coverage in the state. But that did not appear to be enough for Florida’s chief financial officer, Jimmy Patronis, whose department houses the OIR. On Monday, Patronis said on Twitter he had heard rumors. “If that’s true, my office is going to explore every avenue possible for holding them accountable,” he tweeted. “Don’t get to leave after taking policyholder money. Can’t write auto if you’re not doing homeowners either. Zero communication!”

In a letter to Farmers’ Victoria McCarthy, released late Tuesday, Florida Insurance Commissioner Michael Yaworsky said regulators are “disappointed by the hastiness in this decision” and are troubled by how the decision may have cascading impacts on policyholders.

“We also want to directly express our disappointment regarding how this decision was communicated,” the letter reads. “While the office recognizes companies need to make operational changes to books of business, OIR always appreciates the opportunity to discuss these complex issues prior to receiving notifications of this nature.”

In a phone call with Farmers representatives Tuesday, the carrier’s officials committed to facilitating a seamless assumption of policies to other companies that may be interested, Yaworsky noted.

The action by Farmers marks the latest pullback from the Florida market, which has seen 10 property insurer insolvencies in the last 30 months. In some cases in the last two years, announcements that carriers would stop writing new policies have preceded insolvencies by just a few months.

Farmers, fronted on national television ads by actor J.K. Simmons, writes policies across the country and is unlikely to be deemed insolvent. But it, like other national carriers, has taken significant steps to reduce exposure. Farmers announced earlier this month that it would stop writing new homeowner policies in California, another state where insurers and insureds have been hit hard by natural disasters.

Farmer’s pullback in Florida comes at a curious time – just before insurance reform bills passed by the state Legislature can have much of an impact on the flood of costly claims litigation. Industry insiders said Tuesday that Farmers expanded its presence in Florida at exactly the wrong time, just before Hurricane Ian hit the state but before the tort-reform laws have an effect.

In its June announcement that it would halt new HO policies, Farmers said in a statement: “With catastrophe costs at historically high levels and reconstruction costs continuing to climb, we implemented a pause on writing new homeowners policies to more effectively manage our risk exposure.”

Yaworsky’s letter reminded Farmers that Florida’s historic reforms should ensure competitiveness.

Farmers’ insureds must be given 120 days’ notice before policies are canceled or non-renewed, according to state law.

“If a consumer receives a nonrenewal notice from Farmers Insurance Group, they are encouraged to contact their agent immediately to seek alternate coverage,” OIR Communications Director Samantha Bequer said Tuesday.

In late June, Farmers filed for rate changes for its auto policies in Florida, suggesting the company plans to continue at least some presence in the state.

State Sen. Jason Pizzo, D-Miami, tweeted Tuesday, appearing to suggest that that Republican leadership in state government could have done more to prevent a continuing property insurance crisis in the state.

“While campaigning on woke, Florida’s leadership has been asleep,” Pizzo wrote.