Due to rising risks from natural catastrophes, the American Automobile Association withdrew from providing insurance in Florida, joining an expanding list of insurance companies leaving the Sunshine State. In an email to CBS MoneyWatch, the company said: “Unfortunately, the Florida insurance market has become challenging in recent years.” Devastating hurricanes last year had a significant impact on reinsurance prices, which increased the cost of doing business for insurance companies.
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AAA could not say how many consumers would not renew their policies, they did say that “a small percentage” of policyholders would be impacted by the changes. Farmers maintained that only company-branded plans, which account for around 30% of the insurance sold in the state, would be impacted.
Every 11 years, “the 100-year storm” might strike. Homeowners already make premium payments. The top 15 hurricanes in American history are listed below. What is the relationship between storms and climate change? Due to recent natural disasters, Assurant, Bankers Insurance, and Lexington Insurance withdrew from Florida last year, claiming that it was now prohibitively expensive to insure residents. Florida was devastated by hurricanes Ida and Nicholas in 2022, causing billions in damages and about 150 fatalities.
AAA Florida law mandates that businesses notify the Office of Insurance Regulation three months in advance of not renewing a customer’s insurance.
Due to the high costs associated with storm claims, some insurance companies have recently left the Florida market. But after leaving AAA, homeowners and drivers still have options for finding new insurance. Numerous businesses, including Allstate, AIG, GEICO, Hartford, and 21st Century, are still offering plans in the state, according to databases of Florida insurance companies.
AAA Costs for homeowners are rising
The cost of insurance for homeowners in the state is already about three times higher than the national average, and this year, premiums are predicted to rise by around 40%.
Even though lawmakers established regulations in December to stabilize the market, insurance companies are fleeing Florida. A measure that establishes a $1 billion reinsurance fund and provides incentives to discourage pointless lawsuits was approved by Governor Ron DeSantis last year. The law becomes operative in October.
While acknowledging that the new policies are encouraging, AAA also acknowledged that “it will take some time for those improvements to take full effect, and until they do, AAA, like all other providers in the state, is forced to make tough decisions to manage risk and disaster risk.”
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