Farmers Insurance has become the latest insurance company to pull out of Florida, despite repeated efforts by Republican Gov. Ron DeSantis and the state legislature to shore up the volatile market.
On Tuesday Farmers informed the state that it is discontinuing new coverage of auto, home and umbrella policies, a move that will reportedly affect 100,000 policies.
"This business decision was necessary to effectively manage risk exposure," Farmers spokesman Trevor Chapman said in a statement to CBS Miami.
Farmers said the move will affect only company-branded policies, which account for about 30 percent of policies sold in the state. Policies sold by subsidiaries Foremost and Bristol West will not be affected.
The company is the fourth major insurer to leave the Florida market in the past year, with most citing the risk from hurricanes.
And it's the latest sign that extreme weather is threatening the nation's insurance market, with risks for companies growing as climate change increases the strength of hurricanes and the intensity of storms. At least six insurance companies went insolvent in Florida last year, according to The Associated Press.
Farmers' exodus from Florida comes weeks after the company said it would stop writing new policies in the Sunshine State.
"With catastrophe costs at historically high levels and reconstruction costs continuing to climb, we implemented a pause on writing new homeowners policies to more effectively manage our risk exposure," the company said in a June statement.
And Farmers recently announced that it will limit writing new home policies in California, citing wildfire risks and high costs. That move follows Allstate and State Farm, which also said they will not issue new home insurance policies in the state.
As well as fewer options, the cost of home insurance in states hardest hit by climate change has also been rising.
Average annual property insurance premiums had risen to more than $4,200 in Florida by the end of 2022—triple the national average.
Critics have said DeSantis, who is seeking the Republican nomination for president, should have done more to make housing and insurance affordable in his state rather than focusing on "culture war" issues.
Florida's legislature has tackled the issue in recent years, but much of the focus has been on shielding insurance companies from lawsuits and setting aside money for re-insurance to help protect insurers.
DeSantis' press secretary Jeremy Redfern said new laws targeting frivolous litigation against insurance companies show the governor has been focused on the issue.
"Many of the insurance companies in Florida are still saddled with the tailing litigation stemming from recent hurricanes, most notably Hurricane Irma," Redfern told Newsweek in an email. "But due to implemented reforms, we are seeing some new companies entering the market."
He added: "Even the most aggressive reforms will take time to affect the insurance industry. The 2021, 2022, and 2023 legislative efforts will be effective."
In a statement on Tuesday, Florida's Chief Financial Officer Jimmy Patronis, who oversees the insurance regulator, said his department would investigate complaints against Farmers Insurance.
"I want additional scrutiny on this company. Therefore, I have directed my Division of Consumer Services to conduct a deeper dive into Farmers Insurance complaints — and if those complaints hit a certain threshold, it will trigger market conduct investigation that could lead to fines being levied against the carrier," he said.
Patronis added that the company's leadership "needs to get ready, because my guess is they're about to get hauled before the Legislature to answer for their actions when the next legislative session begins."
He also criticized the company's use of environmental, social and governance policies, saying the focus should have been on policyholders.
"I sincerely believe that with today's actions, Farmers Insurance is well on its way to becoming the Bud Light of insurance," he said.
The Office of Insurance Regulation on Tuesday sent a letter to Farmers responding to the notice that it doesn't plan to write new policies.
"Florida's leaders have stepped up to the plate by delivering historic reforms to Florida's property insurance market to ensure competitiveness and increase consumer choice," Insurance Commissioner Michael Yaworsky wrote.
"We are disappointed by the hastiness in this decision and troubled by how this decision may have cascading impacts to policyholders."
Newsweek has contacted Farmers Insurance and the Office of Insurance Regulation for comment via email.
Update 7/16/23, 9:25 a.m. ET: This article has been updated to add comment from Jeremy Redfern.
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