The company is now Fla.’s second-largest private insurer, and its promise to stay in Fla. is a positive sign for an industry that’s had few good signs lately.
MIAMI – State Farm is becoming a good neighbor to Florida again.
The company regained its position as the state’s largest private market insurer – and No. 2 insurer overall – during the first quarter of the year, supplanting longtime No. 2 Universal Property & Casualty Corp., according to an analysis of market share data produced by the state Office of Insurance Regulation.
It’s a positive sign amid continued bad news about Florida’s insurance market, and an early indication that recent reforms could inspire more companies to expand their presence in the state.
State Farm increased its number of personal residential policies from 558,604 in the third quarter of 2022 to 588,005 in the first quarter of 2023, the data shows. That’s an increase of 29,401 – or 5.3%. Universal Property & Casualty, meanwhile, lost 44,775 policies – or 7.0% – during that time and reported 584,954 policies in the first quarter of 2023.
State Farm even responded last week to reports that Farmers Insurance would cut 100,000 company-branded policies in Florida and AAA would decline to renew a number of its policies here by releasing a statement declaring it plans to remain in the state.
“State Farm plans to continue our substantial presence in the Florida insurance marketplace,” 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 that State Farm is “encouraged by the recent insurance reforms and efforts to curb legal system abuse” in Florida “and we will continue to work constructively with the Florida Legislature and the Office of Insurance Regulation to improve the marketplace on behalf of our Florida customers.”
The state’s data shows the venerable insurance carrier – which also sells auto, life, medical, pet insurance – has been slowly adding customers, 30 years after Hurricane Andrew’s assault on South Florida prompted State Farm and other national carriers to reduce their exposure in the state.
When Hurricane Andrew caused $25.5 billion in damages and 625,000 claims in 1992, State Farm was the state’s largest carrier. The storm’s devastation caused 20 companies to pull out of the state. Eight companies went out of business, according to published reports at the time.
And State Farm announced it would no longer write policies for new customers in Florida.
Lawmakers reacted by forming Citizens Property Insurance Corp. to serve as the insurer of last resort for Florida homeowners who could not otherwise find affordable coverage. Growth of Citizens eventually led a number of homegrown private market insurers to start their own businesses by absorbing Citizens’ policies.
If that sounds familiar, it’s because a similar insurance crisis is unfolding in Florida today. A confluence of events – several costly hurricanes, high litigation rates, inflation-triggered increases in inflation costs and rising reinsurance costs – has caused rates to skyrocket and Citizens to grow again.
After reaching 1.5 million policies in 2012, Citizens declined to 419,000 policies by 2019. But now, as private-market insurers are failing again, Citizens has reached 1.3 million policies and continues to grow.
State Farm, meanwhile, remained Florida’s top insurer until it was overtaken by Citizens in the years after a succession of costly storms hit the state in 2004-2005.
In 2007, State Farm had just over 1 million policies.
By 2009, State Farm had fallen to second place, with about 700,000 policies, behind Citizens, which by that time was at 975,500 policies, according to state data.
By 2013, State Farm had fallen to 361,493 policies and was in third place behind Citizens (983,629) and Universal (499,040). And that was the last State Farm policy count available to the public for a decade.
The next year, State Farm started classifying data sent each quarter for the state’s Quarterly Supplemental Report as “trade secret,” meaning it could no longer be available to the public. The company successfully defended its decision in court against the Office of Insurance Regulation. It argued that releasing county-level policy totals publicly provided rivals with too much “proprietary” information.
While State Farm remained among the major 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.
That changed during a special legislative session to enact insurance reforms in May 2022. Along with a number of measures to help stabilize the industry, the Legislature required insurers to submit policy and cost totals each quarter and eliminated the “trade secret” exemption for statewide data.
The first of those reports, with policy totals for the third quarter of 2022, was released around the beginning of the year. It showed State Farm in third place in Florida, behind Citizens and Universal Property & Casualty. The second report, covering the fourth quarter of 2022, showed that State Farm had increased from 558,604 personal residential policies to 576,847.
In the first quarter of this year, the company reported 588,005 personal residential policies, enough to move it into second place.
How many of those policies are in South Florida is not included in the data. But State Farm spokeswoman Roszell Gadson said in an email that the company “continues to insure a significant number of policies in South Florida” and suggested that consumers in “higher risk areas can speak to a State Farm agent about applying for a policy through the State Farm subsidiary company Dover Bay Insurance.”
Travis Miller, a spokesman for Universal, on Friday said the company in recent quarters has written “significantly fewer new policies” due to the “well-documented market concerns” in Florida. Meanwhile, the company’s overall policy number has declined as existing policyholders have sold their homes or gone to other companies, like Citizens, he said.
However, “in the last few weeks it has gradually and conservatively increased the amount of new business it is willing to write” as it assesses that “the market is showing early signs of improvement,” Miller said.
Locke Burt, a former state senator and current president and CEO of Security First Insurance, said he’s glad that State Farm is growing again.
“People who go to State Farm like getting their auto and home insurance from the same company,” Burt said. “My biggest competitor is Citizens. I can’t compete with the government.”
© 2023 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.
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