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, but a company spokesman said Friday it will retain more than 100,0000 policies in Louisiana under three other brand names.
Insurance Commissioner Jim Donelon said 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.
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 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 represent a small amount of business, and Louisiana has plenty of competition for auto insurance, he said.
The group’s Foremost, Bristol West and 21st Century insurance companies won’t be affected by the Farmers Insurance Exchange decision, spokesman Mark Toohey told The Advocate.
“We’re not abandoning the state. We’re not leaving the state,” Toohey said of the group’s three other brands.
Toohey said that while most of the remaining Farmers Group policies are for auto insurance, Foremost has 29,000 mobile home policies in place.
The Farmers Insurance Exchange policies – 28,500 homeowners, umbrella and auto policies – make up less than a third of the total policies the Farmers Insurance Group has in Louisiana, he said.
The Farmers Insurance Exchange brand has never been a major player in Louisiana and has around 2.4 percent of the homeowner’s market and about 0.2 percent of the auto business, 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 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.