AAA dropping some Florida insurance policyholders, citing last year's 'catastrophic hurricane season'
ORLANDO, Fla. - In another sign of the volatility of Florida's home insurance market, AAA said it will be dropping some policies in the Sunshine State. A spokesperson confirmed the decision to FOX 35 News on Thursday but said that AAA will continue writing new home and auto insurance policies in the state.
It comes on the heels of Farmers Insurance announcing earlier this week that it will pull out of Florida despite repeated efforts by Republican Gov. Ron DeSantis and the Legislature to try to calm the market that is making homeownership less affordable.
Florida has struggled to keep the insurance market healthy since 1992 when Hurricane Andrew flattened Homestead, wiped out some insurance carriers, and left many remaining companies fearful to write or renew policies in Florida. Risks for carriers have also been growing as climate change increases the strength of hurricanes and the intensity of rainstorms.
"Unfortunately, Florida’s insurance market has become challenging in recent years. Last year’s catastrophic hurricane season contributed to an unprecedented rise in reinsurance rates, making it more costly for insurance companies to operate," said AAA's Mark Jenkins. "Prior to that, the market was already strained by an increase in claims costs due to inflation and excessive litigation."
Farmers on Tuesday said its decision to pull out of Florida will affect only Farmers-branded policies and will not affect policies sold in the state by subsidiaries Foremost and Bristol West. It indicated that Farmers-branded policies make up about 30 percent of the policies sold by the affiliated companies in Florida.
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One of the key goals of the legislation passed last year by the Florida Legislature was to keep the claims process from ending up being settled in courtrooms.
"We are encouraged by the statutory changes that have recently taken effect and believe they will provide positive results," Jenkins added. "Those improvements will take some time to fully materialize and until they do, AAA, like all other providers in the state, are forced to make tough decisions to manage risk and catastrophe exposure."
Jenkins added that one of those decisions includes issuing some non-renewals and that the number of non-renewals accounts for a small percentage of AAA's business.
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"This decision is one we do not take lightly, yet it’s a necessary one to reaffirm our commitment to the state and those we insure. We acknowledge that this is a difficult time for those affected. AAA insurance agents are willing and able to help them find alternate coverage,"