Originally published by Insurance Journal | Read Full Article
Another Florida property insurer is taking major steps to cut its losses, including suspending the writing of new homeowner policies starting this week – the latest warning sign about the state’s distressed insurance market.
Florida Farm Bureau Insurance, a 50-year-old organization, recently sent a five-point action plan to its agents across the state, saying the company would stop writing new homeowners and dwelling-fire policies starting Feb. 1. During a webinar presentation, company officials also said Farm Bureau also plans to consider non-renewing some portions of policies that are driving losses in the state, and would start identifying homes that have shingle or tile roofs, by age.
Florida Farm Bureau has more than one company in Florida, including a casualty company and a general insurance company. Both of those have made a number of filings with the Florida Office of Insurance Regulation in recent months. And although the memo to agents notes that rate filings are pending, the OIR filing site shows that the most recent homeowner multi-peril filings have been withdrawn.
Agents and officials with Farm Bureau Insurance could not be reached for comment Tuesday morning. But the company’s financial troubles are not a secret. At a Florida Senate committee hearing last week, Sen. Jeff Brandes urged colleagues to take steps to remedy the severe problems facing insurers. Four property/casualty carriers have become insolvent in the last few years and more are expected unless more large rate increases are approved.
“There are companies that will not survive into next year,” Brandes said Thursday. “You’re going to hear tomorrow another Florida-based company that is not going to write in Florida anymore. We are losing companies left and right.”
The AM Best rating organization in October downgraded Florida Farm Bureau Casualty Co. from stable to negative, due to the company’s declining surplus in a hurricane-prone state. In the last five years, Florida Farm Bureau’s surplus declined 13% or about $38 million, through the second quarter of 2021, AM Best reported. The decline has been driven in part by underwriting losses from storms, hurricane activity and ongoing pressure from the automobile insurance line of business. The company is a subsidiary of Southern Farm Bureau Casualty Insurance Co., based in Ridgeland, Mississippi.
The news of Farm Bureau’s underwriting suspension comes a week after a regulatory hearing in which another major P&C carrier asked for 85% and 111% increases in homeowner and dwelling-fire rates in Florida. The head of Southern Fidelity Insurance said that without the hikes, the company will be forced to, once again, seek millions in funding from capital investment groups.
Two other carriers, Centauri Specialty Insurance and Cypress Property & Casualty, also have filed for rate increases, of 28.3% and 26.3%, respectively.
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