AAA has announced that it’s scaling back some of its homeowner’s insurance coverage in Florida, with the decision aligning with several other major insurance providers amid a rise in natural disasters.
“Unfortunately, Florida’s insurance market has become challenging in recent years,” the company said in a statement Tuesday.
“Last year’s catastrophic hurricane season contributed to an unprecedented rise in reinsurance rates, making it more costly for insurance companies to operate. Prior to that, the market was already strained by increased claims costs due to inflation and excessive litigation,” the statement continued.
Only “a very small percentage” of higher exposure homeowner’s policies are affected by the change, and those policyholders have been notified that their plan will not renew, the company said. A spokesperson declined to specify the number of policies or where in the state they are located.
The announcement came a week after Farmers Insurance Group announced that it would no longer write any new policies or renew existing homeowner, auto and umbrella policies for people in Florida. Last year Bankers Insurance and Lexington Insurance, a subsidiary of AIG, also pulled out of the Florida homeowners market.
“This business decision was necessary to effectively manage risk exposure,” Farmers said in a statement released to the Tampa Bay Times.
Farmers in May similarly said it would no longer offer new home insurance policies in California due to more frequent and intense wildfires. The insurance company blamed its decision, in a previously released statement, on “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.”
It’s getting harder to live in the Sunshine State, with Floridians paying on average about $6,000 for their yearly home insurance premium, a 42% increase compared to last year, Mark Friedlander, spokesperson for the Insurance Information Institute, recently told USA Today. The average annual premium in the U.S., in comparison, costs $1,700.
Floridians have also had to deal with exceptionally high inflation rates and housing costs amid an ongoing flood of new residents from other parts of the country.
Forecasters have meanwhile given mixed predictions on this year’s hurricane season in the Atlantic, which started last month and will last through November.
The National Oceanic and Atmospheric Administration has predicted a near-normal hurricane activity season with 12 to 17 total named storms — one to four of which it said could become major hurricanes.
Colorado State University has meanwhile predicted that the season will be “above average, with 18 named storms — four of which they predict will become major hurricanes. CSU previously estimated that the season would be “near average” but updated its prediction due to record warm sea surface temperatures in most of the tropical and subtropical Atlantic.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.