ORLANDO, Florida. – In another sign of Florida’s home insurance market volatility, the AAA has said it will be waiving some policies in the Sunshine State. A spokesman confirmed the decision to FOX 35 News on Thursday, but said AAA would continue to issue new home and auto insurance policies in the state.
This comes on the heels of Farmers Insurance announcing earlier this week that it will pull out of Florida despite repeated attempts by Republican Gov. Ron DeSantis and the Legislature to try to calm a 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 companies, and left many remaining companies afraid to write or renew policies in Florida. Vector risks are also rising as climate change increases the strength of hurricanes and the intensity of downpours.
“Unfortunately, the Florida 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 this, the market was already under pressure due to increased costs of claims due to inflation and excessive litigation.”
Farmers said Tuesday that their decision to pull out of Florida will only affect Farmers policies and will not affect policies sold in the state by subsidiaries Foremost and Bristol West. It states that Farmers-branded policies account for about 30 percent of policies sold by subsidiaries in Florida.
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One of the key goals of a law passed last year by the Florida Legislature was to prevent the claims process from ending in the courtrooms.
“We are encouraged by the legislative changes that have recently come into force and believe that they will bring positive results,” Jenkins added. “These improvements will take some time to fully materialize, and until they do so, AAA, like every other service provider in the state, is being forced to make tough decisions to manage risk and catastrophe risk.”
Jenkins added that one of those solutions involves issuing some non-renewals and that the number of non-renewals accounts for a small percentage of AAA’s business.
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“We do not take this decision lightly, but it is necessary to confirm our commitment to the state and to those whom we insure. We recognize that this is a difficult time for those affected. AAA insurance agents are ready and able to help them. find alternative coverage,