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Farmers Insurance Exchange, which has around 23,000 homeowner and 7,000 auto policies in Louisiana, is dropping those lines of business in the state, Insurance Commissioner Jim Donelon said Thursday.
Donelon said that the company cited substantial losses as a major reason for pulling out of the state’s homeowner’s market.
“I am totally confident, and I told them this when we met last month, that we can readily find places for their policyholders with other companies looking for business in our homeowner’s market,” Donelon said.
Another insurance company has already told Donelon it would like to take over Farmers’ homeowner’s business, the same way that Gulfstream Property and Casualty Insurance Co. assumed the Hanover Group’s 14,000 homeowner’s policies in 2010.
Farmers failed in its last two attempts to raise homeowner’s rates. In 2010, the company sought to raise rates an average of 18.3 percent statewide for its 30,728 policyholders. Last year, Farmers wanted to increase homeowner’s rates an average of 39.0 percent statewide for more than 25,561 policyholders.
The Insurance Department rejected both requests.
The Advocate reports Farmers will stop renewing current policies April 27, which means it will be out of the Louisiana market by April 27, 2014.
Donelon said Farmers has about 2.5 percent of the state’s homeowner’s market.
Farmers is also dropping its auto business, Donelon said. Its 7,000 customers is a small amount of business, and Louisiana has plenty of competition for auto insurance, he said.
Mark Toohey, a spokesman for Farmers and sister company Foremost Insurance Co., said Foremost will continue to sell policies in Louisiana. Foremost specializes in mobile home coverage and has around 7,200 of those policies in Louisiana, Insurance Department records show. Foremost also has more than 5,000 auto policies.
Details on Farmers’ plans for Louisiana were not available on Thursday, Toohey said.
Jeff Albright, chief executive officer of Independent Agents and Brokers of Louisiana, said it’s a little disappointing to see a company pull out of the state.
Louisiana needs more competition for insurance customers, not less, he said.
Albright said Farmers’ decision will force its customers to find new insurers.
Farmers is owned by the Zurich Insurance Group Ltd. Albright said the Farmers move is part of some restructuring by Zurich.
The restructuring is designed to get independent agents out of the Farmers business, Albright said.
However, it’s possible that Farmers could return to Louisiana in a few years once the company gets its house in order, he said.