Nationwide Insurance (isn't nationwide anymore)

[dwg71]

They aren't nonrenewing everybody, they are just not issuing new policies, this is devestating for Florida. Less competition with higher losses equals much higher rates. You better "wish" Florida is sparred this year.

TALLAHASSEE, Fla. August 11 (BestWire) — Nationwide Group will cease writing new personal lines business in Florida as of Sept. 1, a company spokesman said.

Company spokesman Joe Case said no new business for new customers will be written for homeowners, mobile home, condo, renters, boats, inland marine, or dwelling and fire in the state. However, the company will continue to "focus on growing our auto business" in Florida, Case said.

"It's a minor but significant change," Case said. "It reflects Nationwide's attempt to manage challenges in the Florida insurance market. We do not intend to completely pull out of the Florida homeowners market."

The company operates in the state's homeowners market through subsidiary Nationwide Insurance Company of Florida and is the fifth-largest homeowners insurer in the state. Nationwide Florida already had already begun to slow its business and limit writing prior to the announcement (BestWire, June 23, 2005).

Nationwide had estimated an $850 million pretax tab for losses related to the four major 2004 hurricanes. The losses, net of reinsurance recoveries from the Florida Hurricane Catastrophe Fund, translate to $550 million after taxes, with a majority of claims in Florida (BestWire, Nov. 15, 2004). The hurricanes caused $22 billion in losses industrywide.

Case said current homeowners policyholders are not facing nonrenewal or being dropped at this point. But more changes are possible, he warned.

"We are continually reviewing our business strategy," Case said. "We're looking at our options. We're trying to be thoughtful and responsible."

Earlier this year, Nationwide sought approval from Florida insurance regulators to allow a new company, Nationwide Atlantic, to begin operating in the state (BestWire, June 23, 2005). The new company would have eventually taken the place of Nationwide Florida, but Case said the application has been withdrawn as a "logical development" of the decision to cease writing new business.

Sam Miller, executive vice president of the Florida Insurance Council, said Nationwide's decision to cease writing new business was a "prudent" move.

"They are a fine company, and they have to be prudent," Miller said. "Every company has been having to look at its rates and policies."

Miller noted other companies have not been writing new business in the market.

Earlier this year, Allstate Corp. (NYSE:ALL) said it isn't renewing nearly 95,000 homeowners policies in Florida when they expire. The company said substantial losses from 2004's four hurricanes and disappointment in reforms of the catastrophe fund led to the decision (BestWire, May 20, 2005). However, under an agreement with Allstate, Universal Insurance Company of North America will offer the nonrenewed policyholders coverage.

And Safeco Corp. (NASDAQ:SAFC) said it would stop renewing residential property policies beginning in 2006. Safeco stopped writing new policies July 26 (BestWire, July 26, 2005). Safeco said it only has about 30,000 homeowners policyholders in Florida.

"The big players are not going to be able to write new business here," Miller said. "The market in Florida is changing, but it's not changing as much as much as any other state if they had five hurricanes and three tropical storms in less than one year. I don't think any other state could have paid those claims."

Miller said despite the hurricanes — including this season's Dennis — Florida's market has remained strong and viable, thanks in part to the Florida Hurricane Catastrophe Fund. Proof of the market's strength, he said, is the fact that only one company declared bankruptcy following the 2004 hurricane season despite the heavy losses — and that company was "seriously impaired" before the hurricane season began. Also, he said, no major insurers have pulled out of the market, and while some are limiting writing, new companies have entered the market and about six more are awaiting approval to enter Florida.

A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B+ (Very Good) of Nationwide Insurance Company of Florida (BestWire, Aug. 3, 2005). The rating action followed the infusion of $25 million to Nationwide Florida from its parent company and the restructuring of third-party catastrophe reinsurance protection for the Nationwide Group. This capital infusion is in addition to the $100 million contribution made prior to year-end 2004 as a result of the four Florida hurricanes that occurred late that year and had significantly reduced the company's surplus. The rating action reflects the remaining exposure that Nationwide Florida's surplus has to significant Florida hurricane losses.

In 2004, the top five writers of homeowners multiperil in Florida, according to A.M. Best Co. state/line product information based on direct premiums written, were: State Farm Group, with a 23.8% market share; Allstate Insurance Group, with 10.8%; Poe Insurance Group, with 6.5%; USAA Group, with 5.3%; and Nationwide Group, with 5.27%.

[CronkPSU]

yep, i got screwed with Allstate, one of the 95,000 who didn't get renewed, pretty soon, none of the big boys will insure us

[RU4REAL]

I don't believe its right not to REnew policy holders, they should be forced to do that, I understand not taking anyone that NEW...but with cane's up and down the coast they can except to lose alot of business, and they should if they don't stand behind their costumers..Let them put their own selves out of business, other people will stop going to them when word gets out that they drop you like a pancake...

[HURAKAN]

They should be called now the 49ers.

[bvigal]

Having spent many years in the insurance industry, I think state regulators and rating companies need to be much harder on insurance companies.

The whole point of insurance company is, the customer pays them to take on a financial risk. The actuarials are responsible for figuring out the worst case scenareo of loss, adding a "cushion" to that, and setting rates accordingly.

The Best ratings and state insurance divisions are responsible for making sure that companies actually have set those reserves aside to cover losses. Years go by with few claims. Now, because the companies have had to use their reserves, their marketing departments have decided to go where the pickings are better and just leave the real risks to fend for themselves.

If I were legislature in FL, I'd pass a law that no insurance company cancelling, non-renewing, or ceasing business in Florida alone (vs other areas, because of claims) be allowed to do ANY BUSINESS (not auto, not liability, not health, not life) in the state of Florida for the NEXT 99 YEARS!!!

[Lindaloo]

Allstate, State Farm, USF&G, and Lourdes of London stopped writing new business here on the MS Coast after Georges in 98.

Nationwide and Farm Bureau will not write any new business if you live south of the interstate. I guess they think hurrican force winds do not blow north of 10. lol.

[dwg71]

I must stand up for the insurance industry. They do not have a moral obligation to lose money, especially millions stacked upon millions of dollars. The cost of reinsurance has gone through the roof. 9/11 and '04 storms changed the landscape. Insurer's like nationwide have a stop loss on catastrophic losses. $x Million of dollars for each loss. Then they have to go an renegotiate their rates with reinsurers. Well reinsurers are like "its gonna' cost you". So the insurance company which has many other customers in other states say "its better to just cut our losses in Florida, so we dont lose market share in other areas because we have to increase their premiums to cover dramatic increase in reinsurance costs".

It is what it is, you can't make a company lose money. They can't stay in business. I live on the Gulf coast and have expierenced both sides.

[CronkPSU]

Having spent many years in the insurance industry, I think state regulators and rating companies need to be much harder on insurance companies.

The whole point of insurance company is, the customer pays them to take on a financial risk. The actuarials are responsible for figuring out the worst case scenareo of loss, adding a "cushion" to that, and setting rates accordingly.

The Best ratings and state insurance divisions are responsible for making sure that companies actually have set those reserves aside to cover losses. Years go by with few claims. Now, because the companies have had to use their reserves, their marketing departments have decided to go where the pickings are better and just leave the real risks to fend for themselves.

If I were legislature in FL, I'd pass a law that no insurance company cancelling, non-renewing, or ceasing business in Florida alone (vs other areas, because of claims) be allowed to do ANY BUSINESS (not auto, not liability, not health, not life) in the state of Florida for the NEXT 99 YEARS!!!

AMEN!!!!

[Lindaloo]

dwg, if the government would have regulated the insurance industry, we would not have this problem today.

[dwg71]

dwg, if the government would have regulated the insurance industry, we would not have this problem today.

I live in Texas which along with NJ has the most stringant regulations in the US, in regards to insurance. And it is not any better here. It is next to impossible to get wind/hail/hurricane coverage in any county along the coast without going through the Texas Windstorm Insurance Association (TWIA). Companies cant take the risk of a repeat of 04 FL. They cant charge enough premium.

The TWIA offers very few discounts and they have no competition. A 200,000 house in Galveston Co. (not just on the coast, but the entire county) will cost you approximately $3000 a year to insure. And its getting worse.

I dont know what the solution is, but its easy to just blame the insurance industry and they are just one factor in the entire scenerio.

[Wacahootaman]

I live in NE Florida where hurricanes rarely hit directly. Even then I have to pay a 250 dollar hurricane premium on top of my regular rates if I want home owners insurance. It has a 5 thousand dollar deductabe so unless I get major damage, it doesnt cover a thing.

I have to have it if I want homeowners insurance. I cannot drop it and be hurricane uninsured unless I drop the complete policy.

I understand why insurance companies would charge high rates for hurricane coverage in Florida. But I should be able to get a policy with no hurricane coverage if I wanted one. Not so, if you dont get the expensive and nearly worthless hurricane insurance, you can not get home owners period.

Even then, they dont pay half the time either.

[dwg71]

I live in NE Florida where hurricanes rarely hit directly. Even then I have to pay a 250 dollar hurricane premium on top of my regular rates if I want home owners insurance. It has a 5 thousand dollar deductabe so unless I get major damage, it doesnt cover a thing.

I have to have it if I want homeowners insurance. I cannot drop it and be hurricane uninsured unless I drop the complete policy.

I understand why insurance companies would charge high rates for hurricane coverage in Florida. But I should be able to get a policy with no hurricane coverage if I wanted one. Not so, if you dont get the expensive and nearly worthless hurricane insurance, you can not get home owners period.

Even then, they dont pay half the time either.

If your home is financed, which most are, you are required by your lender to cover the home against Hurricanes. If it is not, you are not required to buy insurance. I'm not sure how it works in Fl. But in TX you cant sell policies not approved by the state, we can't sell a policy that does not include hurricane coverage, but you can exclude it by endorsement.

[bvigal]

So the insurance company which has many other customers in other states say "its better to just cut our losses in Florida, so we dont lose market share in other areas because we have to increase their premiums to cover dramatic increase in reinsurance costs"...

Those people in other states should bear the cost, that's how insurance is calculated. One has a loss and many pay the cost, then when it's their turn to need help, vice versa. A tornado outbreak in the midwest, and the rest of the country pays those losses. An earthquake in California, ditto. That's what makes insurance affordable and yet valuable. But, the trend is changing, in casualty, medical, etc., those who really need it, can't get it at any cost, those who don't need it and can well afford it, can. How dumb is that?

Do you know how many states have subsidized 'high-risk' by tax-payer dollar? It began with auto insurance, when states required liability to renew licenses, and no companies would write them. Then it progressed to flood insurance (federal) for areas along rivers, lakes, about 1/3 of the country, I think! (maybe slight exaggeration, but amazing how many are in "official" 200-yr flood-plane.) Then medical insurance, in some states (bless them!!) now other hazards will need to be added, too. Why let the insurance companies in to do business when the taxpayers are footing the bill state-sponsored insurance for anything that might fall in higher than low-risk category?

I'm certainly not advocating companies can't designate certain areas as too high risk and not write policies there. But, if they were doing their math correctly, for those areas they did cover, they should be able to take the loss and continue to insure at least SOMEONE in the whole state of Florida!! Maybe the bigshots won't get such a huge premiums and salary bonuses the next few years, boo-hoo! It's not like hurricanes just suddenly popped up! They were going for the quick and dirty money, now they've had some claims, they don't want to get burned again.

The whole point of an insurance company isn't to be a "good time charley" and gone when tragedy strikes, but just the opposite!!

I sure do support free enterprise and less government, in most situations. I'm not happy the airlines, whom I think needed to stay under govt. regulations, are whining "no money" and getting govt. handouts, but I wouldn't propose they now be regulated again, after all these years. We can live our lives without flying on planes. But, insurance is different than many industries. Possessing coverage is required in many instances. Without it, one can't buy or build a home which needs a mortgage, drive or finance a car, hold certain jobs, walk into an emergency room and expect treatment!

I've been through years and years of insurance companies starting up, merging, raising rates, screwing policyholders - many the elderly, executives going to jail for "take the money and declare title-11" schemes, etc. I guess I just have a very tarnished viewpoint now, having had to face my policyholders with the 'bad news'.

[SkeetoBite]

I don't think they are losing money....

<snip from article>
Property and casualty insurers netted $40.5 billion in profits and increased the industry surplus to more than $400 billion in 2004, the data show. The profit data point to excessive rates throughout the industry and expose the need for tougher regulation of insurance companies, according to consumer advocates with the FTCR.
</snip>

Full article: http://www.consumerwatchdog.org/insuran ... Reforms%3B