Regulators are hoping there will be enough smaller companies to pick up the slack.
Last Friday, State Farm joined Allstate, Nationwide and several other large insurers in a moratorium on new homeowners policies. They'll insure properties they already have, but no more.
Florida insurance regulators take solace on two fronts: State Farm wasn't writing that much new homeowners business anyway, and since January 2006, the state has licensed 22 new insurance companies to write policies.
"Having that many new companies come here after the hurricanes of 2004-05 shows an appetite for the homeowners market in Florida," Tom Zutell, a spokesman for the Florida Office of Insurance Regulation, said Monday.
The most recent data available shows that as of Oct. 1, 2007, the new companies represent 8 percent of the homeowners market, or about 325,000 policies. But four of the new companies are scheduled to remove about 250,000 policies from state-backed Citizens Property Insurance this year, bringing the total policies for the new companies to about a half-million by the end of the year.
One of the biggest advantages to being a new company is not having what those in the industry call a legacy book. It refers to longtime policyholders, some of whom have become too expensive for the insurance company to keep. New companies start fresh, with a blank book of business.
"And these new companies are hungry for the business," Zutell said.
Any State Farm policies not picked up by other private insurers would be assumed by Citizens Property.