Farmers Insurance confirmed it has halted sales of new homeowners policies in Florida just as the new hurricane season is getting underway.
The insurer cited rising costs as the reason.
“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,” Luis Sahagun, communications director for the insurer, explained in an email.
According to data from the Florida Office of Insurance Regulation, Farmers had about 2,800 homeowners policies in the state at the end of 2022.
Florida is still dealing with last year’s Hurricane Ian, which made landfall last September. According to Karen Clark & Co. risk modelers, most of the estimated $63 billion in total privately insured losses from Ian were in Florida. That Florida loss estimate assumes a large number of litigated claims before some of the 2022 and 2023 legislative litigation reforms were enacted.
Ian showed it can take just one storm to inflict a lot of damage. For this year’s hurricane season, which began June 1, NOAA’s Climate Prediction Center is forecasting a range of 12 to 17 total named storms (winds of 39 mph or higher). Of those, five to nine could become hurricanes (winds of 74 mph or higher), including one to four major hurricanes (Category 3, 4 or 5; with winds of 111 mph or higher). NOAA has a 70 percent confidence in these ranges.
The state-backed insurer of last resort for property owners, Citizens Property Insurance Corp., which does not have the option of halting new business, is seeking a 12.5 percent average rate increase.