Farmers Insurance announced on Tuesday that it will no longer provide coverage in Florida. This decision will impact tens of thousands of residents who have home, auto, and other policies with the company. Farmers is the fourth major insurance provider to exit the Florida market in the past year, reflecting the increasing instability of the state’s insurance industry due to extreme weather events.
In a statement to CBS Miami, Farmers spokesperson Trevor Chapman explained, “We have informed the Florida Office of Insurance Regulation that we will no longer offer Farmers-branded auto, home, and umbrella policies in the state. This was a necessary business decision to effectively manage our risk exposure.”
According to Florida law, insurers are required to provide three months’ notice to the Office of Insurance Regulation before notifying policyholders that their policies will not be renewed. Samantha Bequer, a spokesperson for the Office of Insurance Regulation, confirmed that they received a notice from Farmers on Monday, referred to as a “trade secret,” which means the details were not publicly available.
Farmers clarified that this decision will only impact its own branded policies, which make up around 30% of the company’s policies in Florida. Approximately 100,000 customers in Florida could lose their insurance coverage as a result, as reported by CBS Miami. However, policies sold by Farmers’ subsidiaries Foremost and Bristol West will not be affected.
In addition to exiting the Florida market, Farmers has also recently limited the issuance of new policies in California due to the increasing prevalence of record-breaking wildfires caused by climate change. Allstate and State Farm have also stopped issuing new policies in the state.
Insurance Costs Rise Alongside Climate Change
The decision by Farmers to withdraw from Florida reflects the growing impact of climate change on the U.S. insurance market. Homeowners in Florida already pay three times as much for insurance coverage compared to the national average, and rates are expected to increase by about 40% this year. Rising temperatures and ocean temperatures are making hurricanes stronger and more destructive, leading to substantial payouts for insurers and causing some companies in the state to go out of business.
Florida Chief Financial Officer Jimmy Patronis, who oversees the insurance regulator, expressed his intention to hold Farmers accountable if they pull out of the state. In a tweet, he stated, “My office is going to explore every avenue possible for holding them accountable.”
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