“Farmers Insurance has announced a suspension of new homeowners policy sales in Florida, coinciding with the start of the hurricane season, citing escalating costs as the primary reason. The insurer is taking this measure to effectively manage its risk exposure amidst historically high catastrophe costs and rising reconstruction expenses. According to the Florida Office of Insurance Regulation, Farmers had approximately 2,800 homeowners policies in the state by the end of 2022.

Florida is still grappling with the aftermath of Hurricane Ian, which struck in September of the previous year. Karen Clark & Co., risk modelers, estimate that a significant portion of the $63 billion in privately insured losses caused by Ian occurred in Florida. This estimation takes into account a substantial number of litigated claims that were made prior to the implementation of legislative litigation reforms in 2022 and 2023.

The impact of Ian serves as a reminder that a single storm can cause extensive damage. The National Oceanic and Atmospheric Administration’s Climate Prediction Center forecasts a range of 12 to 17 named storms (with winds of 39 mph or higher) for this year’s hurricane season, which began on June 1. Out of these, 5 to 9 storms could develop into hurricanes (with winds of 74 mph or higher), including 1 to 4 major hurricanes (category 3, 4, or 5; with winds of 111 mph or higher). NOAA expresses a 70% confidence level in these projections.

In contrast to Farmers Insurance’s decision, Citizens Property Insurance Corp., the state-backed insurer of last resort for property owners, does not have the option of ceasing new business and is instead pursuing an average rate increase of 12.5%.”