A popular home and auto insurer said it will non-renew certain home insurance policies in Florida without specifying which homeowners will be impacted.
The American Automobile Association cited rising levels of risk due to weather events, such as hurricanes, as well as fraud and abuse.
“It’s not a market withdrawal,” said Mark Friedlander, director of corporate communications at the Insurance Information Institute. “What AAA is doing is a very common practice in Florida where property insurers assess their risk tolerance to determine whether they can profitably write certain types of businesses in Florida. Triple A, just like many companies over the last couple of years, have determined that certain properties no longer fit their risk profile.”
Non-renewal is a formal process in which AAA has 120 days to provide written notice prior to the policy's termination date with an explanation.
“They haven’t announced the type of policies or the volume of policies,” Friedlander told the Florida Record.
AAA represents only a small slice of Florida’s coverage.
III data shows AAA had 130,000 policyholders statewide across Florida at the end of 2022, and their market share was 1.3% of Florida’s property insurance market.
"If you have a package policy that's being non-renewed, you could still apply to purchase only auto insurance from AAA," Friedlander said.
Floridians pay $6,000 a year on average for home insurance compared to the U.S. average of $1,700, which is 3.5 half times as much, according to III data.
Year-over-year, Florida homeowners are paying 40% more on coverage in 2023 than a year ago.
“It's a very tumultuous time for consumers because number one is difficulty finding coverage and number two is difficulty finding affordable coverage,” Friedlander said. "Insurance fraud and abuse are manmade factors and in our determination, we have indicated those are the primary reasons why we are facing a Florida insurance crisis today."
AAA isn’t the only company to halt sales.
Farmers Insurance announced last month that it was stopping writing new business.
As previously reported in the Florida Record, Farmers blamed historically high catastrophe costs and rising reconstruction costs on their decision to withdraw from Florida as hurricane season looms.
"It's only their captive agent business," Friedlander added. "That's 30% of their overall market share in Florida. They will continue to write business in the state through their subsidiary companies. Captive agents are Farmers-branded agents who exclusively just write Farmer's policies. The 70% that Farmers is keeping in Florida through their subsidiaries, those policies are written through the independent agent channel."