A financial analyst said State Farm’s exit from Florida’s homeowner market could help several insurers and a major broker there.
In an investor’s note, Stifel Nicolaus analyst Meyer Shields said the political criticism that State Farm will suffer from its decision could benefit Allstate, which may attract “some disenfranchised State Farm customers,” giving the company greater control over planned expansion there.
Also benefitting could be Daytona Beach, Fla.-based insurance broker Brown & Brown, as customers turn to the independent agent channel for coverage. Another beneficiary, he said, could be Progressive, as former State Farm customers “seek lower-cost alternatives,” either through independent agents or the Internet.
On the other hand, he continued, with over 800,000 homeowners and renters policies in the state, State Farm could have some leverage because the state’s property insurer of last resort, Citizens, is seeking to reduce exposures and “would struggle to absorb that much business,” which could lead to a lighter regulatory approach that would benefit the company.
However, if a National Catastrophic Insurance Fund does emerge, as proposed by Democrats, it could lead to “more government intrusion in the Florida property insurance markets.”