Title: AAA | American Automobile Association stops renewing some Florida insurance policies, Cites 2022 Hurricane Season Impact

American Automobile Association stops renewing some Florida insurance policies:

The American Automobile Association (AAA) has decided to halt the renewal of certain insurance policies in Florida, attributing the decision to an “unprecedented” surge in reinsurance rates in the state after last year’s hurricane season. This move marks AAA as the latest insurer to mitigate its risk exposure in the hurricane-prone Sunshine State.

In an official statement conveyed to FOX Business on Wednesday, AAA emphasized its continued presence in Florida and its intention to expand new auto and homeowners businesses in the region. However, the company has ceased the renewal of “a small percentage of higher exposure package policies” underwritten by the Auto Club Insurance Company of Florida, which encompass both types of coverage.

“Regrettably, Florida’s insurance market has become increasingly challenging in recent times,” the statement reads. “The catastrophic hurricane season of the previous year has led to an unparalleled surge in reinsurance rates, rendering insurance operations more costly. Before this, the market was already strained by rising claims costs due to inflation and extensive litigation.”

AAA did not disclose the number of affected policyholders but assured that those customers have already been notified and can reapply for coverage through its sister carrier, the Auto Club South Insurance Company.

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AAA’s announcement follows a similar move made by Farmers Insurance, which also reduced coverage in Florida and decided to discontinue offering Farmers-branded auto, home, and umbrella policies in the state.

The Florida insurance market has recently suffered many difficulties, with some private insurers declaring insolvency and others deciding to stop offering coverage entirely in the state.

Seven insurers have been deemed insolvent in Florida since the beginning of 2022. Compared to the national average of $1,700, the state’s average yearly property insurance premiums have increased by 42% this year, totaling $6,000. Notably, Florida has roughly 15% of homeowners without property insurance, compared to 7% nationwide. The Insurance Information Institute, a research organization supported by the insurance industry, provided these statistics.

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The matter has been a topic of concern for the GOP-led legislature and Republican Florida Governor Ron DeSantis in the past two years. They have undertaken various measures, including a special session in December, with the main focus being on protecting insurance companies from lawsuits and allocating funds for reinsurance to safeguard insurers.