In early June, Farmers Insurance coverage Group introduced it could stop issuing new householders insurance policies in Florida for the foreseeable future. A Farmer’s spokesperson defined the choice, stating, “[w]ith disaster prices at traditionally excessive ranges and reconstruction prices persevering with to climb, we carried out a pause on writing new householders insurance policies to extra successfully handle our danger publicity.”1 The announcement comes on the heels of an inflow of insurance coverage claims following Hurricane Ian’s widespread devastation to the state.
Whereas this weblog has coated the slightly intensive points policyholder advocates have had with Farmers (right here, right here, right here, right here, right here, and right here, to call a number of), the transfer might have some regarding implications. Economics 101 tells us that, by limiting the choices out there to policyholders, competitors within the Florida insurance coverage market decreases, which can drive already rising prices of protection increased. With fewer carriers to select from, property house owners might face challenges in securing protection at inexpensive charges or discovering insurance policies that meet their particular wants. Additional, whereas present policyholders might not instantly be affected by Farmers’ resolution, this improvement might result in elevated scrutiny from insurers when it comes time for coverage renewals. As insurance coverage corporations reassess their danger publicity, their underwriting practices might grow to be extra stringent. This might lead to policyholders dealing with stricter necessities, increased premiums, or non-renewal of their present insurance policies.
In fact, there’s additionally the potential that Farmers policyholders might expertise a rise in declare denials. With the corporate aiming to handle its danger publicity and lower losses, it’s potential its claims-handling course of will get a facelift – does McKinsey and Co. ring a bell? – aimed toward saving cash. Sadly, as we’ve seen earlier than, when insurance coverage corporations want to save, they have a tendency to take action on the expense of the policyholder.
Then again, it’s not all dangerous. Farmers’ resolution will be seen because the accountable strategy to keep away from overextending their monetary capabilities, thereby defending the policyholders they have already got. Moreover, Farmers’ withdrawal from the market opens up alternatives for different insurance coverage corporations to step into the gaps Farmers is leaving. This creates area for brand spanking new and present insurers who’re higher outfitted to deal with the challenges of the area’s distinctive dangers. The shift out there panorama leaves room for insurers who don’t place income over policyholders (and a few do exist!) to do the correct factor.
Maybe most significantly, Farmers simply stated what each insurance coverage firm is considering: the rising frequency and severity of catastrophic occasions paired with the regular improve of fabric and labor prices is slicing into the business’s income. The inducement for insurance coverage corporations to delay and deny claims has by no means been increased. Policyholders in Florida and across the nation ought to pay attention to this potential danger and be ready to navigate the claims course of diligently. And, as all the time, ought to an unjust delay or denial occur to you or somebody you might be representing, the attorneys at Merlin Legislation Group are all the time right here to assist.
1 Kane, Libby, and Sarah Silbert. The place to Get New Residence Insurance coverage in Florida Now That Farmers Doesn’t Provide It. 14 June 2023,. Accessible on-line at www.businessinsider.com/personal-finance/farmers-homeowners-insurance-florida-alternatives-2023-6.
