Farmers Insurance Florida withdrawal: What it means for the state and impacted policyholders

Florida Democratic lawmakers are pointing to the withdrawal of Farmers Insurance from the state as evidence recent Republican-led reforms implemented to stabilize the market have failed.

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However, representatives from the insurance industry are downplaying that assertion.

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Florida lawmakers took on the state’s broken property insurance market in two special sessions last year.

Changes included disincentivizing claims litigation and $3 billion to bolster reinsurance.

Now, with Farmers Insurance announcing it will be pulling out of the state and canceling a combined 100,000 home, auto and umbrella policies, Florida Democrats have argued it’s clear those fixes didn’t work.

Related Story: Florida leaders respond to insurance provider’s decision to drop tens of thousands of policies

“Trickledown economics doesn’t work, and neither does trickledown property insurance relief. What we saw was a $3 billion bailout for the insurance companies,” Florida House Minority Leader Rep. Fentrice Driskell (D-Tampa) said.

In the past 18 months, seven homeowners’ insurers have gone belly up, 15 have stopped writing policies in the Sunshine State and Farmers is now the third to voluntarily pull out of the state.

“On the surface you wouldn’t see much improvement at this point, and that’s not surprising,” Mark Friedlander with the Insurance Information Institute said.

Friedlander downplayed the significance of Farmer’s withdrawal from Florida, noting the company accounts for less than two percent of the market share.

He argued the reforms passed last year will take time to make an impact.

He added Farmers’ decision was based on its national risk exposure, rather than Florida-specific problems.

“This is not a negative reaction to what’s happening in Florida or a feeling that the company doesn’t think the legislature did enough,” Friedlander said.

Related Story: Farmers Insurance policyholders in Florida: What you can do next

Jacksonville attorney Eddie Farah with Farah & Farah argued at the end of the day, due to the reforms passed by state lawmakers, homeowners lucky enough to find insurance have been left with fewer options to recoup claims they’re owed, as they’ll have to pay out of pocket in most cases to hire an attorney.

“[It] has done nothing to lower insurance rates and what it’s done is taken away from the consumer any rights they have, any weapons they have to hold the insurance companies accountable for not paying them the fair amount on a claim,” Farah said.

Meanwhile, Florida’s Chief Financial Officer Jimmy Patronis issued a strongly worded statement promising to hold Farmer’s accountable for pulling out of the state and suggesting its investments in ESG led to the company’s financial troubles.

“Farmers Insurance is well on its way to becoming the Bud Light of Insurance,” Patronis said.

Regardless of the reason for the withdrawal, the impact won’t be felt by the affected 100,000 Farmers policyholders in the short term.

“Some state officials came out and said Farmers is abandoning their customers during hurricane season. Far from the truth,” Friedlander said.

Friedlander explained Farmers’ withdrawal can’t even be approved until early October.

Related Story: Florida homeowners take major hit in crumbing property insurance market

Only then will it start sending out 120-day nonrenewal notices.

“No impacts on the 2023 hurricane season in terms of your coverage. All your claims, if you have any outstanding claims with Farmers, those will all be processed by the company,” Friedlander said.

Farah recommended consumers start shopping for new policies sooner rather than later.

“You don’t want to be left without any type of coverage. So, start looking now,” Farah said.

But Farah noted, when you start a new policy coverage doesn’t generally begin for 30 days, so consumers should time their switch accordingly.

“So, if your policy runs out and you’re in that 30-day period, you won’t have coverage in the event a storm hits,” Farah said.

There’s a bit of good news for Farmers policyholders.

The parent company also operates other home and auto insurance brands which will still be available options in Florida.

“So, you could still stay with a Farmers group insurer,” Friedlander said.

Those alternatives include Bristol West®, Foremost SignatureSM, Farmers GroupSelectSM, Foremost Choice® and Foremost®-branded policies.

Related Story: Citizens Property Insurance weighs double-digit rate increase for Florida customers

“There is no impact to 70 percent of policies currently in force for customers in the state,” Farmers Insurance spokesperson Trevor Chapman said. “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.”

Those looking to switch from Farmers completely can shop for other options.

“Our understanding is there’s more options than there were a year ago. That’s positive,” Friedlander said.

Driskell noted the Office of Insurance Regulation offers a useful tool to help gauge competitive rates on a county level.

“You can punch in your county, punch in a little information about your house and see what the rates are for your particular circumstance so that you can know whether or not you’re getting a competitive rate and you can use that data to shop around,” Driskell said.

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You can check out rates in your county using the OIR tool by clicking here.

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