Nationwide Insurance to drop 60,000 homeowners policies in Florida
By Jeff Harrington, Times Staff Writer
In Print: Thursday, October 8, 2009
Nationwide Insurance Co. announced plans Wednesday to drop about 60,000 homeowners policies across Florida, including more than 10,000 in the Tampa Bay area.
Nationwide, the latest insurer to dramatically scale back its presence in the hurricane-prone state, said nearly all customers with only a homeowners policy will be affected.
About 45,000 Nationwide customers who have a homeowners policy plus an additional line of insurance like car or boat policies will not be affected, said company spokeswoman Nancy Smeltzer.
Once among the largest property insurers in Florida, Nationwide has aggressively cut its exposure over the past four years. In 2005, it dropped more than 50,000 policies and said it would stop writing new business in the state. Two years ago, it revealed it was dropping 39,000 more homeowners and 1,600 commercial policies.
Last time, it steered its dropped customers to Security First Insurance, a small Ormond Beach insurer. This time, it says it will try to place policyholders with Gainesville-based Tower Hill.
Tom Zutell of the Florida Office of Insurance Regulation said the state appreciated that Nationwide arranged for a "soft landing" with Tower Hill. Customers always have the option of seeking other insurers, he said.
A.M. Best Co. recently downgraded the financial strength ratings of three property insurers associated with Tower Hill Insurance Group from B (fair) to D (poor). The ratings agency said it was concerned about the companies’ hurricane exposure and whether they had sufficient reinsurance to handle claims from a severe hurricane.
State regulators, however, said they had no concern about Tower Hill’s financial viability. Zutell said the company is constantly monitored, as are all insurers. He noted the company received an A (exceptional) from another ratings agency, Demotech Inc.
The cuts will leave Nationwide with 275,000 policies in Florida. The remainder of policies it is keeping cover auto, specialty auto, commercial and power sports lines such as boat coverage.
"These actions are part of our efforts to manage risk, maintain viability and remain in a strong position to service policyholders in the state of Florida," the company said in a statement. "This is a difficult business decision, but Nationwide must make tough choices now to make sure they can be here for our customers in the future."
Smeltzer said the company used modeling to gauge its long-term viability and decided its best option was eliminating the homeowners policies.
No customers will be affected during the 2009 hurricane season, the company said.
In a filing Wednesday with the Florida Office of Insurance Regulation, Nationwide indicated that the first nonrenewals will be effective in July 2010. The process is expected to take two years.
The pullback comes as State Farm, the largest private insurer in the state, is negotiating with state regulators over terms of a complete withdrawal from the state’s property insurance market. Nearly 1 million policies are affected by State Farm’s exodus, including about 700,000 covering single-family homes in Florida.
The state hopes several newly created Florida-based insurance companies — seeded with government funds — will help absorb policies relinquished by State Farm, Nationwide and other large insurance companies. The idea is to keep the policies from flooding into already overburdened Citizens Property Insurance, the state-run insurer of last resort. Critics, however, have argued that the new, and much smaller, insurance companies might not be on firm enough financial footing to survive a catastrophic hurricane.
Beyond concerns over losing more choices for coverage, Florida homeowners are facing another problematic issue: More than a half-dozen major property insurers have recently filed with state regulators seeking rate increases.
Jeff Harrington can be reached at email@example.com or (727) 893-8242.