AAA has become the fourth insurer to pull back from offering insurance to residents of Florida in the past year. The company said it will not renew the auto and home insurance policies for some customers in Florida.
“Unfortunately, Florida’s insurance market has become challenging in recent years,” the company said in a statement emailed to CBS MoneyWatch. “Last year’s catastrophic hurricane season contributed to an unprecedented rise in reinsurance rates, making it more costly for insurance companies to operate.”
AAA’s announcement came just days after Farmers Insurance announced it will no longer offer coverage in Florida. While the AAA change is only expected to affect “a small percentage” of policy holders, the Farmers decision will affect roughly 100,000 customers.
“We have advised the Florida Office of Insurance Regulation of our decision to discontinue offering Farmers-branded auto, home and umbrella policies in the state,” Farmers spokesman Trevor Chapman said in a statement to CBS Miami. “This business decision was necessary to effectively manage risk exposure.”
Earlier in July 2023, Farmers announced it would limit its home insurance policies in California. State Farm and Allstate have taken similar steps in The Golden State.
“With record-breaking inflation, severe weather events, and reconstruction costs continuing to climb, we are focused on serving our customers while effectively managing our business,” a spokesperson for Farmers told ABC10. “Effective July 3, Farmers will limit new homeowners insurance policies in California to a level consistent with the volume we projected to write each month before recent market changes.”
Between California’s wildfires and Florida’s hurricanes, natural disasters have proven to make insuring residents too expensive for insurance companies like AAA.
Hurricanes Ian and Nicole devastated Florida in 2022, causing billions of dollars in damage.
Home insurances is not cheap for residents either. Homeowners in Florida pay about three times as much for insurance coverage as the national average. Rates are expected to soar about 40% in 2023.
