State Farm Insurance said beginning next year it will drop about 50,000 Florida homeowners' insurance policyholders as it doubles the coastal setback area where it will not write windstorm coverage.
Most of the home and condominium policies that will not be renewed are within a few miles of the coast, but some are farther inland, State Farm spokesman Justin Glover said.
Mr. Glover said the move made public Thursday was "a very tough decision for us to make, but it is part of our decision to remain in this market." State Farm filed paperwork Thursday with the state Office of Insurance Regulation notifying authorities of the company intention to drop the policies.
The carrier is currently the largest private home insurer in the state with about 1 million policyholders, currently.
Mr. Glover said the company has doubled the current coastal setback to two miles and for the first time will non-renew homes in that area.
"It is all about managing our risk," Mr. Glover said. "Even if we do not add one single policyholder our maximum probable loss (MPL) figure will rise. We have to do something about that."
Policyholders who already have a State Farm auto policy will be able to keep some portions of their homeowner policy, such as fire and theft. However, no State Farm customers in the affected areas will be insured for windstorm coverage.
Other direct writer carriers like Allstate and Nationwide have already reduced homeowner policy-writing in Florida.
The largest hurricane insurance provider overall is state-backed insurer of last resort Citizens Property Insurance Corp., which now has the authority to insure some coastal property even when private coverage is available.
Mr. Glover emphasized that no policy holders will lose coverage during the current hurricane season, which runs through November. Customers will start to be dropped after Jan. 1st, 2008, when their policies come up for renewal.
He also said that Citizens will likely offer the most economic alternative to those policyholders left without coverage next year.
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