Another insurance carrier is pulling its business from Florida: What it means for you

Another property insurer is dropping coverage in Florida.

Farmers Insurance will stop writing new business and not renew its existing “Farmers-branded” automobile, home and umbrella policies in the Sunshine State, the company said Tuesday.

Last month, Farmers said it was only pausing new business in Florida. The company is also limiting new home policies in California, where it is based, according to news reports.

“This business decision was necessary to effectively manage risk exposure,” the company said in a statement.

The move will impact 30% of the company's business in Florida, or roughly 100,000 policies. Policyholders affected by the decision are required to be given 120 days' notice that their coverage will not be renewed.

Farmers on Monday sent notice of its plans to the Florida Office of Insurance Regulation, which is reviewing it. Insurers must give the office 90 days' notice if they want to discontinue writing business in Florida.

More: ‘I almost had a heart attack’: Florida homeowners rattled by property insurance costs

Policies under other Farmers brand names won't be affected

Policies under its other brands such as Bristol West, Foremost Signature, Farmers GroupSelect, Foremost Choice and Foremost-branded policies will not be affected.

This marks the latest stumble into instability for Florida’s property insurance market. Seven Florida property insurers were declared insolvent in the past 18 months, and another 15 have stopped writing new business in the same time period, said Mark Friedlander, spokesperson for the Insurance Information Institute.

Farmers joined Bankers Insurance and Lexington Insurance, a subsidiary of AIG, in withdrawing from the market since last year, he added.

In a letter a Farmers executive Tuesday, Florida Insurance Commissioner Michael Yaworsky expressed that he would have preferred to speak with the company prior to being given notice, and that his office was "disappointed by the hastiness in this decision and troubled by how this decision may have cascading impacts to policyholders."

The decision to pull business from Florida was "made independently" of a number of legislative changes made to address the insurance market, Yaworsky wrote, and was "part of a broader series of actions Farmers is making across the country and not solely focused on Florida."

The letter also notes that Farmers committed to transferring affected policyholders to other insurance companies. Anyone who receives a nonrenewal notice from Farmers should contact their agent as soon as possible to seek other coverage.

More: Citizens wants its rates to go up by double digits. Will insurance regulators agree?

Skyrocketing premiums: Do you have to have insurance on your Florida home? Not necessarily

Florida Insurance Consumer Advocate Tasha Carter called the decision from Farmers Insurance "devastating for all Floridians."

"It creates a ripple effect – it directly impacts Farmers’ current policyholders who will be thrust into a position of having to find new insurance potentially during hurricane season and into a homeowners insurance market that is significantly limited in availability and affordability," Carter said.

Mel Montagne, president of Fair Insurance Rates in Monroe who spoke out against the most recent rate increase proposed by Citizens Property Insurance, said he anticipates that this will result in increased insurance rates and more homeowners relying on the state-run insurer.

Citizens continues to grow, with 1.3 million policies as of the end of May.

"It's becoming the only insurer in the state of Florida, it seems," he said.

State lawmakers attempted to address the property insurance crisis with two special sessions last year and the most recent regular session. This included stopping one-way attorney fees and prohibiting third parties such as roofers or contractors from being paid directly by insurance companies.

Advocates for the changes have said any impact will take time, but they likely won't result in reduced rates as Florida homeowners continue to face increased property insurance costs.

Floridians on average are paying about $6,000 for their yearly home insurance premium, an increase of 42% compared with last year, Friedlander said. By comparison, the average annual premium in the U.S. costs $1,700.

"There's no doubt that it's already a market where it's difficult for policyholders to find private market coverage in the homeowner space," said Paul Handerhan, president of the Federal Association for Insurance Reform, adding that he wasn't surprised by the announcement. "Any company that's going to pull back on their underwriting or not renew policies is going to make it more difficult."

A day before the Farmers announcement was made public, Florida Chief Financial Officer Jimmy Patronis tweeted that he heard rumors about Farmers leaving Florida and that the Department of Financial Services "is going to explore every avenue possible for holding them accountable."

"Don't get to leave after taking policyholder money. Can't write auto if you're not doing homeowners either. Zero communication!" Patronis wrote.

The Palm Beach Post reached out to the department on Tuesday for further comment and whether the policies under other Farmers brands would be looked into. A spokesperson did not respond and instead directed a reporter to the Office of Insurance Regulation.

Hannah Morse covers consumer issues for The Palm Beach Post. Drop a line at hmorse@pbpost.com, call 561-820-4833 or follow her on Twitter @mannahhorse.

This article originally appeared on Palm Beach Post: Farmers Insurance to no longer offer certain home policies in Florida