The insurance giant cited the need to ‘manage its risk exposure’ in the hurricane-prone state as the primary reason behind this business decision.

While Farmers Insurance serves approximately 100,000 customers in Florida, policyholders who utilize Farmers’ owned subsidiaries such as Foremost Signature and Bristol West will not be impacted. The company assured that these policies will continue to be available to meet the insurance needs of Floridians. Affected customers will receive notifications detailing the termination of their coverage and will be provided with guidance on options for replacement coverage.

Florida has experienced significant challenges in its insurance market, with 15 home insurers imposing moratoriums on new business over the past 18 months. Additionally, four carriers have announced plans to withdraw voluntarily from the market, and seven companies have been declared insolvent. The state’s vulnerability to extreme weather, including hurricanes, has contributed to the difficulties faced by insurers. Furthermore, Florida’s legal system has been accused of promoting litigation abuse and excessive claims, adding to the strain on insurers.

Although the insurance industry advocated for reforms to address these issues, including measures to curb abuse, the outlook for insurers has not significantly improved. The flood of nearly 300,000 lawsuits filed just before the new laws took effect has further complicated the marketplace. Experts predict that this volume of lawsuits will drive more regional insurance companies out of business, exacerbating an already challenging situation.

Florida’s location and low elevation make it particularly susceptible to hurricane damage. Last year, Hurricane Ian caused $114 billion in inflation-adjusted damage, making it the costliest storm in the state’s history and the third costliest in US history after Hurricane Katrina in 2005 and Hurricane Harvey in 2017.

Farmers Insurance’s decision to limit new homeowners insurance policies in California earlier this week, along with similar changes made by State Farm and Allstate in the state, underscores the broader challenges faced by insurers in managing risks and ensuring affordability in high-risk areas.

The withdrawal of Farmers Insurance from Florida raises concerns about potential cascading impacts on policyholders and highlights the ongoing struggles in the state’s insurance market amid increasing climate risks.