Shortly after Farmers made a similar announcement, this insurer followed suit.
AAA has announced that it will not be renewing auto and home insurance policies for some of its existing Florida customers, becoming the next in a growing list of insurers scaling back their business in the struggling state.
Florida has been facing disasters in increasing frequency and severity, sending insurers fleeing.
With the number of hurricanes and tropical storms leaving catastrophes behind in Florida, auto and home insurance companies in Florida are choosing not to renew policies for some customers in the state. Farmers recently announced this type of decision, and AAA has now also done so.
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“Unfortunately, Florida’s insurance market has become challenging in recent years,” said a statement quoted by CBS MoneyWatch. “Last year’s catastrophic hurricane season contributed to an unprecedented rise in reinsurance rates, making it more costly for insurance companies to operate.”
At the time this article was written, AAA was declining to state precisely how many customers can expect to receive notice that their coverage will not be renewed. Instead, it said that this decision will impact “a small percentage” of its policyholders.
Over the last year, there have been four auto and home insurance companies that have made similar moves.
This has been viewed as an indication that the extreme weather patterns experienced by the state due to climate change are destabilizing the coverage market.
Farmers’ decision to shrink its business in the state is expected to affect about 100,000 policyholders. According to that insurer, its decision will affect only company-branded policies, which comprise about 30 percent of the policies it sells in Florida.
The other two insurers that have also made similar decisions within the last year include Bankers Insurance and Lexington Insurance, an AIG subsidiary. Both of those companies withdrew from Florida altogether last year. Both of those insurers stated that the natural disasters regularly and increasingly affecting the state have made it too expensive to provide coverage in the home insurance market. Hurricanes Ian and Nicole left devastation behind in the state last year, killing around 150 people and leaving billions of dollars in damage.
Here are some FAQs about AAA and other insurers scaling back business in Florida due to catastrophes:
Q: Why is AAA scaling back some of its homeowner’s insurance coverage in Florida?
A: AAA, like many other insurers, is scaling back its offerings in Florida due to the increased frequency and severity of natural disasters in the area, particularly hurricanes. The insurer is taking steps to manage its risk and ensure financial stability.
Q: How many policyholders will be affected by AAA’s decision?
A: While the exact number of policyholders who will be affected by AAA’s decision has not been disclosed, the insurer has stated that it is only non-renewing a small percentage of its auto and home insurance policies in Florida.
Q: What is the reason behind other insurers taking similar steps in Florida?
A: Other insurers in Florida are also scaling back business due to the increased risk of hurricanes and other natural disasters in the area. The state has experienced several major storms in recent years, resulting in billions of dollars in damages. This has led to higher costs for insurers, making it financially unsustainable for some to continue offering coverage in the area.
Q: How will this decision impact both the policy owners and the insurers involved?
A: For policy owners, this could lead to higher insurance premiums as they seek alternative coverage. However, policyholders should have ample time to find alternative coverage and should not experience any immediate disruptions in their insurance coverage. For the insurers, this decision is aimed at managing risk and catastrophe exposure, and ensuring financial stability.
Q: Can you provide additional information about Farmers Insurance Group’s decision to no longer write new policies or renew existing auto, umbrella, or home insurance coverage in Florida?
A: Yes. Farmers Insurance Group recently announced that it will no longer write new policies or renew existing auto, umbrella, or home insurance coverage in Florida. This decision will impact about 100,000 customers in the state. The move comes after Florida Chief Financial Officer Jimmy Patronis tweeted his concerns about rumors of Farmers pulling out of the state and threatened to take action against the insurer if it went ahead with the plan.
