State Farm becomes a good neighbor of Florida again.
The company regained its position as the state’s largest private market insurer and No. 2 insurer overall in the first quarter of the year, displacing longtime No. 2 Universal Property & Casualty Corp., according to a market share analysis prepared by the State Insurance Administration.
This is a positive sign amid continued bad news about the Florida insurance market and an early sign that recent reforms may inspire more companies to expand their footprint in the state.
The data shows that State Farm increased the number of personal housing policies from 558,604 in the third quarter of 2022 to 588,005 in the first quarter of 2023. This is an increase of 29,401 or 5.3%. Meanwhile, Universal Property & Casualty lost 44,775 policies, or 7.0%, during that time and reported 584,954 policies in the first quarter of 2023.
Last week, State Farm even responded to reports that Farmers Insurance would cut 100,000 company-branded policies in Florida and AAA would refuse to renew a number of its policies here by issuing a statement saying they plan to stay in the state.
“State Farm plans to continue our significant presence in the Florida insurance market,” the company said in a written statement. “Our current plans include a commitment to responsible growth so that we can maintain the financial strength to deliver on our promises to our customers.”
The statement said State Farm is “emboldened by recent insurance reforms and efforts to curb abuse of the legal system” in Florida, “and we will continue to work constructively with the Florida Legislature and the Insurance Regulatory Authority to improve the market on behalf of our clients in Florida.”
The state’s data shows that the respected insurance company, which also sells auto, life, medical and pet insurance, is gradually increasing its customer base 30 years after Hurricane Andrew hit South Florida, prompting State Farm and other national carriers to reduce their footprint in the state.
When Hurricane Andrew caused $25.5 billion in damage and filed 625,000 claims in 1992, State Farm was the state’s largest carrier. The devastation caused by the hurricane forced 20 companies to leave the state. According to reports published at the time, eight companies went out of business.
And State Farm announced that it would no longer issue policies for new customers in Florida.
Legislators responded by creating Citizens Property Insurance Corp., which served as the insurer of last resort for Florida homeowners who were otherwise unable to find affordable insurance coverage.
The growth in the number of citizens eventually led to a number of homegrown insurance companies in the private market starting their own businesses by gobbling up citizens’ policies.
If this sounds familiar, it’s because a similar insurance crisis is unfolding in Florida today.
A combination of events—several costly hurricanes, a high level of litigation, inflation-driven increases in inflationary costs, and rising reinsurance costs—has driven up rates and populations soaring.
After reaching 1.5 million policies in 2012, the number of Citizens policies dropped to 419,000 by 2019.
But now that private market insurers are failing again, Citizens has reached 1.3 million policies and is continuing to grow.
Meanwhile, State Farm remained Florida’s top insurance company until it was overtaken by the Citizens in the years following a string of costly storms that hit the state in 2004–2005.
In 2007, the state farm had just over 1 million policies.
By 2009, State Farm had fallen to second place with approximately 700,000 policies behind Citizens, which by then stood at 975,500 policies, according to government data.
By 2013, the number of State Farm policies had dropped to 361,493 and ranked third behind Citizens (983,629) and Universal (499,040). And that was the last count of state farm policy available to the public in a decade.
The following year, State Farm began classifying the data submitted each quarter for the State’s Quarterly Supplementary Report as “trade secrets,” meaning it can no longer be made available to the public. The company successfully defended its decision in court against the Insurance Regulatory Authority. It argued that the public disclosure of policy outcomes at the county level provided competitors with too much “own” information.
While State Farm remained among the top carriers in Florida, insurance watchers in Florida suddenly lost the ability to know how many policies it had and how the company compared to other insurers.
This changed during a special session of the legislature on insurance reform in May 2022. Along with a series of measures to stabilize the industry, the Legislature required insurers to submit policies and cost totals every quarter and removed the “trade secret” exemption for statewide data.
The first of these Q3 2022 policy outcome reports was released around the start of the year. In it, State Farm ranked third in Florida behind Citizens and Universal Property & Casualty. The second report, covering the fourth quarter of 2022, showed that State Farm increased from 558,604 personal housing policies to 576,847.
In the first quarter of this year, the company reported 588,005 personal residence policies, enough to move it into second place.
How many of these policies are in effect in South Florida is not included in the data. But State Farm spokeswoman Roselle Gadson said in an email that the company “continues to insure a significant number of policies in South Florida” and suggested that consumers in “high-risk areas can speak with a State Farm agent about applying for a policy through State Farm subsidiary Dover Bay Insurance.”
Travis Miller, a spokesman for Universal, said on Friday that the company has written “significantly fewer new policies” in recent quarters due to “well-documented market concerns” in Florida. Meanwhile, the company’s overall policy count has declined as existing policyholders have sold their homes or gone to other companies such as Citizens, he said.
However, “over the past few weeks, he has gradually and conservatively increased the number of new orders he is willing to write,” as, in his estimation, “the market is showing the first signs of improvement,” Miller said.
Lock Burt, a former state senator and current president and CEO of Security First Insurance, said he was pleased to see State Farm growing again.
“People who go to State Farm like to have their car and home insured with the same company,” Burt said. “My biggest competitor is Citizens. I can’t compete with the government.”