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Jeffrey M. Liggio Jan. 27, 2009

We’ve been watching the homeowners insurance market in Florida for more than 20 years now. The latest news is that State Farm announced today that it will not renew any homeowners policies in Florida.The impact on Florida homeowners is significant, 703,357 homeowners’ policies, written for $1,054,918,245.00, will be affected.This follows a trend that began after Hurricane Andrew, in 1992. Prior to Hurricane Andrew, there had not been a major hurricane that had hit Florida for 25 years. That means that the homeowners insurers had made an enormous profit on the homeowners premiums for those 25 mild years. You would think that they would have been prudent and conservative with their policyholder’s premiums during that time, so that they would be able to easily withstand a major hurricane loss... (Do you really think that they were any better or smarter at investing your premiums then than they are now?)Instead, after Hurricane Andrew, the homeowner insurers cried out that Hurricane Andrew had created huge money problems for them, and lobbied the Florida legislature for changes to the law, which permitted them to form “Florida” domiciled subsidiaries,like State Farm “Florida” thus allowing them to decouple their homeowners and auto business. The legislature also formed the state owned insurance company, Citizens, and subsequently the market has deteriorated to the point that all of the major carriers have now pulled out of the homeowners insurance market in Florida,Homeowners have very little choice today, there have been problems with some of the smaller carriers that entered the market, and prices for homeowners insurance have done nothing but go up, and for less coverage.This does not bode well for the availability and affordability of coverage, and it certainly will affect what happens if you are a homeowner with a smaller insurer in the event that you need to make a claim.