Jul 18, 2023
Florida’s Chief Financial Officer, Jimmy Patronis, is displeased with a major insurance provider leaving the state in the middle of hurricane season. Farmers Insurance recently announced that it would discontinue its coverage for cars and homes across the state in order to “effectively manage risk exposure.”
But the state’s CFO blamed “wokeness” for the insurer’s retreat.
Advertisement
"Farmers has become the Bud Light of the insurance industry," Patronis told Fox late last week. "They've been prescribing to the United Nations proclamations and edicts that they've been pushing out."
The CFO has threatened fines and an investigation. But there’s evidence to suggest the ongoing insurance retreat isn’t exactly limited to Florida or Farmers Insurance.
Sunsetting insurance in the Sunshine State
On Monday, July 10, the Florida Office of Insurance Regulation said it received a “market reduction notice” from Farmers Insurance Group. Details were not provided because the information is considered trade secrets based on Florida insurance statutes.
However, this wasn’t the first sign of retreat from Farmers. A month ago, the company announced it would stop issuing new homeowners’ policies in the sunshine state. “This business decision was necessary to effectively manage risk exposure,” said the group’s director of public relations, Trevor Chapman in a statement issued about the latest move to cut back.
The move is expected to impact 2% of Floridian homeowners — or about 100,000 people.
Regulators such as Florida Insurance Commissioner Michael Yaworsky said they were “disappointed by the hastiness in this decision.” Meanwhile, CFO Jimmy Patronis indicated that the dispute could be ramped up. “My office is going to explore every avenue possible for holding them accountable,” he said in a Tweet.
In a press release, Patronis indicated that “woke” political ideology could have played a part in Farmer’s latest move.
Advertisement
“While they’re bad at helping people, they’re good at virtue signaling…I sincerely believe that with today’s actions, Farmers Insurance is well on its way to becoming the Bud Light of insurance.”
However, Farmers isn’t just retreating from Florida. It’s also cutting back operations in (famously woke) California. At the same time, other insurance giants cut back too. This all indicates that there’s a more significant trend playing out.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Climate change
Three major home insurers left Florida before Farmers Insurance — including AAA which said it would no longer renew some policies in the state. “Unfortunately, Florida’s insurance market has become challenging in recent years,” AAA said in a statement. “Last year’s catastrophic hurricane season contributed to an unprecedented rise in reinsurance rates, making it more costly for insurance companies to operate.”
Florida has always been prone to hurricanes but the severity of weather-related issues has ramped up in recent years. Record-breaking temperatures in the Atlantic Ocean coupled with an El Nino event are expected to make this hurricane season particularly troublesome.
Climate risk is reflected in the premiums homeowners pay. Floridians pay an average of $6,000 to insure their home, compared to the national average of $1,700. Environmental risk has also pushed State Farm and Allstate out of the insurance market in disaster-prone California.
The entire industry could be on the verge of a “crisis of confidence around the ability to predict loss,” according to Aon PLC President Eric Andersen. Weather patterns are becoming less predictable and the insurance industry is based on predictability.
“Just as the U.S. economy was overexposed to mortgage risk in 2008, the economy today is over-exposed to climate risk,” Andersen told a Senate committee during a recent hearing.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
