WASHINGTON, D.C. (NewsNation) — Days after a major insurance provider announced it was pulling out of Florida due to environmental risks, State Farm Insurance announced Thursday it is recommitting itself to the residents of the state, NewsNation has learned.
“State Farm plans to continue our substantial presence in the Florida insurance marketplace. Our current plans include a commitment to responsible growth so that we can maintain the financial strength to deliver on our promises to our customers,” State Farm spokesperson Roszell Gadson said in a statement. “We are encouraged by the recent insurance reforms and efforts to curb legal system abuse and we will continue to work constructively with the Florida Legislature and the Office of Insurance Regulation to improve the marketplace on behalf of our Florida customers.”
Two days prior, one of the nation’s leading insurance providers, Farmers Insurance, announced it is going to end its home, auto and umbrella coverage in the state and curtail offerings in California due to risks from environmental disasters.
Florida is at particular risk due to the hurricanes and tropical storms that have historically battered its coasts, while California has its own unique risks in the form of its wildfire season.
Since 2007, Florida’s property insurance market has been in turmoil after some policy decisions led some insurers to flee Florida, and the state’s insurer of last resort, Citizens, saw the number of policies it had to issue balloon.
Wednesday, state insurance officials announced some private insurers expressed interest in taking over 275,000 property insurance policies issued by Citizens.
In a statement shared earlier this week with NewsNation partner The Hill, Farmers confirmed it planned to end coverage in the Sunshine State, saying, “This business decision was necessary to effectively manage risk exposure.” The insurer will also curtail new homeowners’ insurance policies in California, due to “record-breaking inflation, severe weather events, and reconstruction costs.”
A spokesperson for Florida’s Office of Insurance Regulation (OIR) told The Hill it is reviewing the notice, but added that it was marked as trade secret, restricting how much the office can discuss it. In the meantime, the spokesperson pointed to a state law that requires all insurers to give 90 days’ notice before discontinuing lines of insurance in Florida. Customers are entitled to 120 days’ notice.
Last month, Farmers announced it would not write new property policies in Florida due to rising catastrophe costs, while State Farm, California’s largest homeowners insurer, announced in May that it would halt new policies in the state due to catastrophe exposure. AIG, meanwhile, announced earlier it would end new policies for homeowners along Florida’s coastline.
Florida officials pointed out a major problem has been the cost increases for insurers. In 2019, they said 8.6% of property insurance claims were filed in Florida yet 76% of property insurance litigation occurred in the state. Gov. Ron DeSantis pushed the legislature for insurance reform this session.
“Many of the insurance companies in Florida are still saddled with the tailing litigation stemming from recent hurricanes, most notably Hurricane Irma. But due to implemented reforms, we are seeing some new companies entering the market,” Jeremy Redfern, spokesman for Gov. Ron DeSantis’ office, said in a statement to NewsNation. Redfern pointed to a bill signed into law by DeSantis during the 2021 legislative session that would change the way litigation takes place in Florida.