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The large influx of calls from concerned State Farm policyholders wantingf to findnew coverage, after the companyu announced last month that it wanted to stop writingh property insurance in Florida, has some agencies hiring new Those agencies said they are finding comparable, if not rates across all types of insurancee coverage for their new customers. “We get 50 to 100 calls a day per from StateFarm policyholders, said Davidr Miller, CEO of Jacksonville-basedd independent agency . Thouggh the business is welcome, especiallty in a recession, property insurers are concernedx about their limited financial capacity tocover 1.
2 millioh State Farm policyholders and the expected increase in reinsurance costs this year. Brightwauy has 200 employees in 40 officesdacross Florida. Miller said he hopes to add five more offices in the next30 days. Even before State Farm Floridaw announcedits two-year exit strategy Jan. 27, Milleer said Brightway added five new employees per week sincr the beginning ofthe year, but he expectsx to hire 10 to 20 more employeexs each week as increased volume Insurance agents agreed that of the States Farm policyholders who are looking for anothefr property insurer, many are choosin to transfer their whole business including other types of policies.
On the automobile insurance side, other carriers can beat the rates set by State Farm on theierpolicyholders “pretty handily,” said Roxanne personal lines manager for independent agency The agency also recentlty hired another account manager to help with increased State Farm Florida spokesman Michal Connolly took exceptiohn to Starbuck’s statement. “We’re always very competitivs on auto insurance,” he said. Starbuc said if a home insured by State Farm was buil tafter 2002, “we can meet the rate and in some we can beat it.” But many homeowners’ policiee with State Farm were “very inexpensive.
” Miller said some of the policyholders have been overinsuredd and are paying too much for the insurance becausw of “inflation protection,” which automaticalluy increases the coverage on the house each year. “Iff you don’t watch it, it can become substantiallyu more than the actual cost to rebuild theexistin house.” Brightway agents are reportinbg a 25 percent to 50 percent savings over the State Farm policyholder’s premium by switching to another insurer, he said.
Agents are finding comparablr rates primarily because there are more insuranc carriers willing to cover propertiesd in Florida now compared with a couple of yearsd ago when carriers were fleeingvthe state. Among 26 new insurers in the statrsince 2006, 24 were for homeowners’ insurance, according to the . An additionaol seven existing insurance companiesd were approved towrited homeowners’ coverage during that time. St. Augustine-based has had an increasde in policies since the beginning ofthe year, some of whicbh was from State Farm policyholders, said President and CEO John Rogan.
“We’de all like to help very much with a markegt anomaly like State Farm wantingto withdraw, but it has to be a prudenty business decision,” he said. Though many insurers in the statee have been aggressively marketing to State Farm one of their largest concernes is making sure they can afford the reinsurance to take on more policiexs and therefore a greater exposure in the Insurers buy reinsurance every year to coverr their risk of losses for insuringtheifr policyholders. In Florida, every insurance company has to buy reinsurancde fromthe state-run Florida Hurricanw Catastrophe Fund, or Cat Fund, and from othetr reinsurance companies.
As the bond market tightened, however, insurance leadere became increasingly concerned about theCat Fund’s abilityu to go to the bond markert in order to pay claims.
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