The Ugly Surprises That Await if you Wait For State Farm Florida to Cancel Your Home Insurance

October 9th, 2022 by admin No comments »

State Farm Florida Insurance Company announced earlier this year that it intends to leave the Florida Property and Casualty Insurance Market. The only thing still yet to be determined is the actual terms of the withdrawal plan and the timing around when the policy cancellations will begin.

Front and center are the estimated 700,Guest Posting000 State Farm Florida home insurance policies that are expected to be cancelled over a two year period – that’s over 29,000 policies that will be cancelled each and every month for two years. Regardless of your perspective, this is the most significant event that has ever occurred in the history of the Florida homeowners insurance market – and you could not pick a worse time for this to happen.

To begin with, many of the home insurance policies that will be dropped by State Farm Florida will occur at the exact same time that Citizens Insurance Florida will be moving forward with higher rates in 2010 as required by law.

Although dumping on big insurance in Florida has become one of our favorite things to do, here are some little known facts that won’t ever make the coverage of State Farm Florida’s planned withdrawal from the state

Florida Home Insurance Companies Losing Money in Good Weather

March 18th, 2022 by admin No comments »

Your Florida home insurance company should have been getting stronger during the past three years of mild hurricane seasons. However there is more than a 50% chance that it is not.

Despite this recent period of mild hurricane seasons, the financial stability of many Florida home insurance companies is facing serious trouble. Over half of the companies actively writing new business in Florida lost money during the past year. Three companies failed completely and had to be taken over by the state. One of the companies that failed wrote new business exclusively in the 12 most southern coastal counties in the state. Why are these companies failing and why is it that so many companies are losing money?

For starters, Florida home insurance rates have been held artificially low by the state for the past three years by the legislators. While it has been politically popular with voters to do this, low rates have contributed substantially to the poor finances of these companies. Florida’s state run insurance company – the largest company in the state sets the benchmark for rates in the market. Because it does not charge enough for the coverage it offers, private companies are forced to keep their rates lower – whether they are losing money or not. Newly formed companies that take policies out of the state run insurance company have to price their policies at or below the state run company virtually guaranteeing that they will lose money from the start.

There has also been an increase in non-hurricane claims and reopened claims from prior hurricanes. The tough economy is a factor because anyone who experiences a loss when times are tough is more likely to file a claim in the present environment. Florida home insurance companies are also experiencing more fraudulent and suspicious claims at the present time. This fraud can involve filing a claim during normal rain storms in order to get money to fix an outdated roof. It could also include suspicious fire claims along with theft claims from home burglaries that include high value items the homeowner never owned. Finally, there has been a rise in new and re-opened hurricane claims from the storms of 2004/2005 which led directly to the collapse of one company that had exhausted its reinsurance coverage.

Last but not least, investment income is way down. Florida home insurance companies are constantly looking for ways to generate a safe return on their surplus funds. That’s not easy for fund managers to do with the poor condition of the financial markets. Rates of return on low and risk free investments are way down in this slumping economy with low interest rates. Finding places to invest surplus cash with higher rates of return could result in unacceptable risk levels. After all, it isn’t acceptable for a company to tell you that it can’t pay your claim because it lost your money in the stock market.

Your first reaction to the poor performance of these companies might be one of very little concern. After all, why should you care if an insurance company makes money? Even if you are the biggest hater of insurance companies ever born, it is still important for your company to make a reasonable profit – especially in years when there are not any hurricanes. Those years are supposed to be the time when these companies take in a lot more in premium and pay a lot less out in claims. The fact that this hasn’t happened for most companies should be sending out alarm bells across the state of Florida.

You’ve been told that big insurance companies are evil and maybe some of them are. But it is the newest, smallest home insurance companies that can’t make money in these mild non-hurricane years. These companies are the future of Florida home insurance. If they don’t make even a bare minimum amount of money during non-hurricane years, don’t expect them to be around to pay your claim after the next Florida hurricane.