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Farmers Have to Cancel Their Nonrenewal Notices

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Approximately at the same time that Farmers Insurance announced a significant withdrawal from the Florida and California markets, it also delivered thousands of nonrenewal notices to Georgia customers. However, it seems the carrier misread Georgia’s unusual law on cancellations and has been forced to backtrack.

The nonrenewal warnings that Farmers had mailed to homeowners in early July were reversed, according to a bulletin issued by Georgia Insurance Commissioner John King on Friday. Farmers stated in their notices of nonrenewal that they would no longer insure a home with a roof that was 15 years old or older.
According to Georgia Act 33-24-46, carriers are not permitted to alter underwriting parameters or eligibility conditions for current policies unless the alterations affect a complete group or geographic area and have been approved by the commissioner’s office.

Weston Burleson, the commissioner’s director of communications and legislative affairs, said, “I don’t know how unique our law is, but I know that a lot of states don’t have it.”

The law does not regulate the decisions of farmers about new policies.

On Monday, Farmers’ director of public relations Trevor Chapman provided little new details.

In an email, Chapman explained that the company had reversed course and would not be “non-renewing a limited number of homeowners policies with older roofs.” We have started informing those who will be directly impacted by our decision.

Some in the industry in Florida were taken aback by the unexpected turnaround, given that several insurers in recent years had declined to renew HO policies in the state due to factors including roof age and a fragile market. Some have argued that Farmers’ lawyers should have been aware of the legislative and regulatory constraints in Georgia before the company began phasing out its exposure there gradually. Farmers is one of the largest property carriers in the country.

“I am extremely disappointed with the actions of Farmers and am contemplating additional disciplinary actions at this time,” King stated in the announcement.

King threatened Farmers with financial penalties and the revocation of their business license to operate in Georgia.

On July 6th, letters were sent to at least some Georgia policyholders with Farmers. King’s staff did not know how many homeowners were affected, but Burleson estimated that tens of thousands were. The office responded to the letters within a fortnight.

According to a statement released by King last week, “it was brought to our attention this week that Farmers Insurance had alerted their customers that they would be non-renewing any homeowner policies on homes with roofs over 15 years old,” in clear violation of Georgia law. My department took prompt action, instructing Farmers to cancel the cancellations.
These cancellations are indicative of the state of the U.S. property insurance market, which has taken a beating in recent years due to natural disasters like the California wildfires and the storms and claims litigation in Florida. On July 10th, Farmers notified Florida authorities that the company will be leaving the state this year, with the exception of policies written by Farmers’ affiliate companies.

Farmers had announced a month prior that it would no longer issue coverage in Florida, so this filing came as no surprise. Farmers, also based in California, declared it would stop issuing new homeowner’s insurance in California, joining State Farm and Allstate in making this decision.

Although the law has been on the books for a few decades, this is the first time regulators in Georgia have forced a property insurer to reverse course on nonrenewals, according to Burleson. On the other hand, the newly elected King (in 2019) has voiced his displeasure with auto insurers that have increased premiums without consulting him first.

King’s office worked with Georgia lawmakers this year to modify the statute on use-and-file rate increases after Allstate increased vehicle premiums by an average of 40% in 2022. Starting on July 1st, the commissioner’s office will have an additional 60 days to consider any requests for rate increases.

Photograph: @eliasfalla on pixabay

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Farmers Have to Cancel Their Nonrenewal Notices

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