Farmers Insurance will pull out of Florida, withdrawing 100,000 car, home, and umbrella insurance policies from the state within 120 days.
In a statement, the company said, “This business decision was necessary to effectively manage risk exposure.”
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The Washington Post calls it “the latest retreat by insurance companies reluctant to cover Americans living in disaster-prone areas.” As costly weather disasters grow more common, profiting by insuring Americans against them becomes difficult.
Related: How to Buy Car Insurance: Everything You Need to Know
The problem is more acute in the home insurance market. But the United States Bureau of Labor Statistics reports that auto insurance rates nationwide have increased by 17.1% over the past year.
Some of that increase is due to growing repair costs as cars become more high-tech. But some may be due to frequent floods and other weather disasters.
A peninsula in hurricane country is perhaps the worst risk of all for insurance companies. The Insurance Information Institute, an industry trade group, tells The New York Times, “Insurers have not, as a whole, earned profits on underwriting — or as a result of their overall business activities — in Florida since 2016.”
Related: Flooded Car? FAQs for Affected Owners and Shoppers
Under Florida law, insurance companies must give customers 120 days’ notice before ending policies, giving customers time to find alternate insurance.
