Farmers Insurance Pulls Out of Florida

Facts

• Farmers Insurance announced Tuesday it was dropping home, auto, and umbrella policies across Florida due to increased risks of hurricanes. Though the company declined to say how many customers would be impacted, it's estimated that 93K-100K Floridians hold Farmers policies.¹
• A company said customers who use Farmers' subsidiaries like Foremost Signature and Bristol West will continue to be served while others "will receive notifications detailing when their coverage will end and will be advised of options for replacement coverage." State law requires a 120-day notice.²
• Farmers said it had "advised the Florida Office of Insurance Regulation of [its] decision," while Florida's Chief Financial Officer Jimmy Patronis — critical of the decision — directed his head of Customer Services to investigate any customer complaints.³
• Farmers last month said it would stop writing new policies in Florida, citing "reconstruction costs." Other insurers have cited lawsuits as the main reason behind the state's high rates, while financial audits of failed insurers point to excessive payouts, high salaries, and fees to affiliated companies.¹
• To combat this, state lawmakers made it harder to sue insurance companies and allocated $3B during storm season, but policy premiums have still gone up. Between November and March, rates went up by 5% in Miami-Dade County, 9.5% in Hillsborough County, and 9.25% in Pinellas County.¹
• According to the Insurance Information Institute, in the last year and a half, 15 home insurers have halted new policies, four have withdrawn from the market, and seven have collapsed.²

Sources: ¹Tampa Bay Times, ²CNN, and ³Daily Caller.

Narratives

• Narrative A, as provided by State of the Planet. As climate change-induced natural disasters make it increasingly hard for both residents and insurance companies to stay afloat in states like Florida, there are potential solutions that both insurance companies and governments must take. They should run various climate scenarios to know what weather is coming, create incentives for customers to fortify their property from damage, and incorporate climate risk into their policies.
• Narrative B, as provided by The Conversation. While weather is undoubtedly a contribution, the main reasons insurance companies are in this predicament are because of lawsuits, fraud, and loose regulations. For example, contractors will offer to fix a roof if the homeowner signs over their insurance benefit; contractors are then able to file whatever claim they want, and when the insurer refuses to pay, the contractor sues. The majority of these claims and subsequent lawsuits are seen in Florida, which is why it is the worst state for home insurance.