State Farm, once Florida’s largest home insurer, has parted ways with about one in 10 of its remaining homeowners, or more than 40,000, in the year since announcing it is writing new business in the state again, according to data requested by The Palm Beach Post.
James Savage said he “almost blew an artery” when he learned the company said it was writing new Florida policies last year. The West Palm Beach resident said he was a State Farm customer for 36 years, made recommended property upgrades and never filed a storm-related claim, yet got dumped anyway.
Now he’s not impressed with the latest update.
“State Farm should be banned from the state or at least from the South Florida area from selling either auto, property insurance and or investments,” Savage said. “Is it possible to hate State Farm? You bet!”
How many customers left by choice – and how many the insurer canceled or did not renew – is not available in public records because State Farm has gone to court to declare that information a trade secret. The pending case is approaching a one-year anniversary May 15.
If anything, the exodus seems to be speeding up. The numbers indicate more than 30,000 customers left in the second half of the year to drive the company’s total count down to 348,020 by the first day of 2015.
Is this part of a strategy to continue reducing overall risk exposure while wooing select new customers – or is the company avidly back in the game but just losing out to competitors?
“State Farm Florida has implemented a strategy to expand and grow our offering of homeowner and renters policies,” spokeswoman Michal Brower said. “Any overall customer policy gains or losses are reflective of a variety of factors in Florida’s increasingly competitive private market, including increased customer choice, underwriting eligibility, and rate consideration. So yes, net losses can be attributed in large part to marketplace competition.”
Arguing it could not make enough money to cover Florida risks without higher rates, State Farm has shed about half a million homeowners in the past half dozen years. The strategic retreat by State Farm and other national insurers changed the market profoundly and forced residents to find other coverage, mostly from state-run Citizens or smaller start-up companies based in Florida.
State Farm officials provided a statewide total when the newspaper asked, but declined to say how many customers it has in individual counties like Palm Beach. That information is publicly available for virtually every other insurer in the state.
By the end of 2013, State Farm had less than 13,000 home insurance customers left in Palm Beach County compared to more than 50,000 four years earlier, state records showed. State Farm went off the grid in public records after that.
Counting homeowners, rental and rental dwelling policies, the company had 508,328 total personal lines policies in Florida by the end of 2014, company officials said. A homeowner policy count of about 348,000 would still rank State Farm third in the state behind Citizens, which had 643,000 by year’s end, and Universal Property & Casualty Insurance Co. of Fort Lauderdale with 506,000.
Heritage Property & Casualty Insurance Co. of St. Petersburg, which didn’t even exist three years ago, is moving up fast in fourth place with 217,000, mostly by way of transfer offers to Citizens customers.
Part of the story here is growing competition after nearly a decade without a hurricane, some observers say.
“Historically competitive rates in the global reinsurance market have allowed Florida domestics to take on more risk, write more policies, and better compete, which is good,” said Christian R. Cámara, Florida director of the R Street Institute, which describes itself as a free market think tank.
On Feb. 3 of last year, State Farm announced an expanded offering of homeowner and renters policies accommodating in-state transfers, customers moving in from other states, and “a limited number of new customers.”
“While limited in scope, this is a positive step that may offer State Farm customers additional opportunities to purchase homeowners coverage,” a company statement at the time said. “We recognize the unique challenges of the Florida insurance market, and continually evaluate and monitor our ongoing efforts to responsibly manage our growth in Florida.”
On homeowner policies, at least, State Farm is managing not to grow, the numbers show. It is losing ground – whether that’s because of competition, bruised feelings among Florida consumers, a plan to shed property risk but avoid a harsh official stance against new policies to protect its auto business, or some combination platter of factors.
Nicole Vinson, director of the advocacy group Policyholders of Florida and a Tampa attorney who sues insurers, said she is aware of only one former State Farm customer in her area being offered coverage again. But she has trouble believing the state’s former No. 1 player in home insurance would continue losing tens of thousands of customers without some plan in mind.
“I think they’re too savvy a company,” Vinson said.
Source: The Palm Beach Post
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