Within the same week that one Farmers Insurance Group sought approval from state regulators to cancel roughly 30% of its business in Florida, another insurer has announced a pullback in the Sunshine State.
Dearborn, Michigan-based AAA Insurance confirmed Friday that while it will continue to write new home and auto insurance policies for its members in Florida, it will issue some non-renewals of existing policies.
The plans to non-renew policies for Farmers and AAA include both home and auto policies.
For homeowners, a growing lack of options among private insurers has led to a big boost in the number of policies being written by Citizens Property Insurance Corp. – the state-backed property insurer in Florida originally conceived as an insurer of last resort.
Instead, real estate professionals such as Anita Malick, CEO of Orlando-based title company The Closing City, have seen the pivot to Citizens by homebuyers firsthand.
“In past years, I felt like we saw a variety of insurers and a little bit of buyers coming in with Citizen’s policies. Now, three-fourths of our closings are Citizen’s policies – probably because that’s the only one they’re finding.”
In an effort to address the roiling insurance marketplace here, the Florida Legislature and Gov. Ron Desantis in December 2022 passed a new law, Senate Bill 2-A.
The legislation sought to, among other things, disincentivize alleged frivolous insurance-related litigation – in 2021, nearly 80% of all homeowners’ lawsuits related to property insurance in the U.S. were filed in Florida – as well as to bolster reinsurance support to stabilize the market.
Those efforts have not gone unnoticed, either.
“We are encouraged by the statutory changes that have recently taken effect and believe they will provide positive results,” Jenkins said. “Those improvements will take some time to fully materialize, and until they do, AAA, like all other providers in the state, are forced to make tough decisions to manage risk and catastrophe exposure.”
That the legislation passed will take some time to bear fruit is a sentiment echoed by Gregory Marholin, an insurance executive with decades of experience who is now the president of St. Petersburg-based RescomX Insurance Solutions, a contractor specializing in building and restoration work on behalf of property insurers.
“[The December legislation] was a very good start, but it’s going to take two years for that to really have an impact,” Marholin said, adding that because the legislation took aim at insurance-related litigation, there was a flood of legal activity filed ahead of its enactment that may further bog down insurers in the short-term.
“It is going to get worse before it gets better.”
By Steven Ryzewski- Staff Writer, Orlando Business Journal. Jul 17, 2023