Insurers are trapped in a riddle: In a world where the risk of costly disasters is rising but high premiums are squeezing policyholders and angering state regulators, how can they continue to make money?
Farmers, one of America’s biggest home insurers, didn’t say what specifically led to its decision.
Was the cost of payouts too high in recent years, which saw record-setting numbers of billion-dollar disasters, just as rates charged by reinsurers, which sell insurance to insurers, were rising?
Or is Farmers playing a game of chicken with state regulators, hoping that walking away now will give it leverage to charge customers more in the future?
“A lot of insurers have been losing a lot of money in Florida and they’ve been threatening to leave for years,” said Daniel Schwarcz, a professor at the University of Minnesota Law School who specializes in insurance.
Persons:
they’ve, ”, Daniel Schwarcz
Organizations:
Farmers Insurance, reinsurers, Farmers, University of Minnesota Law School
Locations:
Florida