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Farmers Insurance to End Coverage in Florida
Farmers Insurance announced on Tuesday that it will no longer offer coverage in Florida, impacting tens of thousands of residents in the state. This decision marks the fourth major insurer to pull out of Florida in the past year, reflecting the growing concerns over the state’s insurance market and its vulnerability to extreme weather events.
According to Farmers spokesman Trevor Chapman, the company has informed the Florida Office of Insurance Regulation about its decision to discontinue offering Farmers-branded auto, home, and umbrella policies in the state. Chapman stated that this move was necessary to effectively manage risk exposure.
Under Florida law, insurance companies are required to provide a three-month notice to the Office of Insurance Regulation before notifying customers that their policies will not be renewed. The notice submitted by Farmers was categorized as a “trade secret” and its details were not made public.
Samantha Bequer, a spokeswoman for the Office of Insurance Regulation, confirmed that the agency received the notice from Farmers on Monday, indicating its intention to exit Florida. However, the specifics of the notice were not disclosed.
Farmers stated that this decision will only impact company-branded policies, which account for approximately 30% of the policies sold in Florida. As a result, nearly 100,000 customers in Florida will lose their insurance coverage. Policies sold by Farmers’ subsidiaries Foremost and Bristol West will not be affected by this change.
This move by Farmers follows similar actions by other insurers in different states. For example, Allstate and State Farm have ceased issuing new policies in California, which has experienced unprecedented wildfires fueled by climate change.
This exodus from Florida is indicative of the impact of climate change and the use of fossil fuels on the U.S. insurance market. Homeowners in Florida already pay three times more for insurance coverage compared to the national average, and rates are expected to increase by 40% this year. Additionally, multiple insurers in the state have faced financial challenges and even gone out of business due to large payouts for storm-related damages. The rising temperatures and warmer waters resulting from climate change have also led to stronger and more destructive hurricanes.
Florida Chief Financial Officer Jimmy Patronis, who oversees the insurance regulator, expressed his concerns about Farmers’ decision. He tweeted that his office will explore all possible avenues to hold Farmers accountable if they proceed with their withdrawal from Florida.
It is evident that the impacts of climate change are leading to significant shifts and challenges within the insurance industry, with Florida serving as a prime example. As extreme weather events become more frequent and severe, insurers and regulators will need to find innovative strategies to protect policyholders and ensure the stability of the insurance market.
