Farmers Insurance Group notified its North Carolina agents that the insurer will pull out of the homeowners' market across the state before year's end.
Independent agent Greg Reeder of Reeder Insurance Services in Mint Hill, N.C., said he recently signed on with Farmers and was disappointed to hear the news.
Reeder said agents were notified on Aug. 12 that the company will stop selling its homeowners insurance product in September, and non-renewals will be issued in November. This affects all areas of the state, he added.
Jerry Davies, Farmers media relations director, said company executives met with Insurance Commissioner Jim Long and his staff on Aug. 12. The official mailing to agents went out on August 13, he reported.
Chrissy Pearson, a spokesperson for the North Carolina Department of Insurance, confirmed the Farmers notification.
Reeder said the company is concerned that it could be assessed as much as $50 million in the event of future catastrophic damages. North Carolina's hurricane assessment process kicks-in if losses exceed the system's financial capability, he said.
Bob Bird, chief executive officer of the Independent Insurance Agents of North Carolina received the letter that Farmers Senior Vice President and Chief Marketing Officer, Jack Hannigan, sent to agents across the state.
In North Carolina there are three plans -- Fair, Beach and Coastal, Hannigan said. If losses exceed the financial capability of the plans, insurers are assessed based on the percentage of homeowners business they have in the state and the amount of writing along the coast, he continued.
Hannigan said the Beach and Coastal plans have been growing rapidly, and the current value of risk to the company makes it necessary for Farmers to take this action.
This change will not affect any other lines of Farmers' business in the state, Hannigan said.
In his letter, Hannigan encouraged agents to voice their opinion to
the state legislature regarding the hurricane assessment process and its affect on business opportunities and objectives.
"Farmers regrets having to non-renew our homeowners customers, but the current hurricane assessment process has forced us to make this difficult business decision," Hannigan said.
Pearson said Farmers represents 1 percent of the state's homeowners' market share.
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