Nationwide Cutting Fla. Renewals

Nationwide Insurance announced yesterday that it will start dropping 39,000 Florida home insurance customers and 1,600 commercial property insureds as their policies come up for renewal starting Jan. 1, 2008.

The Columbus, Ohio-based company, Florida's fifth largest home insurer, said it was taking the action as part of steps to manage its property exposure in the state.

Nationwide said it will continue more than 506,000 total policies in Florida, including more than 176,000 personal lines property policies. Notices to those being dropped will go out next month.

In reaction, the Florida Office of Insurance Regulation (OIR) issued a statement saying the move reflected what most of the Florida insurance market is doing.

The carrier explained it will increase its focus on auto lines, commercial casualty lines and financial services offerings. It noted the change will not affect Nationwide policyholders in Florida this hurricane season.

Jeff Rommel, regional vice president of Florida Operations, said in a statement, "Nationwide is making some difficult choices today that will better position the company to deal with the many challenges posed by the Florida insurance market. We have an obligation to act responsibly to ensure long-term stability for Nationwide's customers, agents and associates."

Nationwide said it plans to withdraw its dwelling fire product line but will continue to serve more than 176,000 personal lines property policies after implementing the reductions.

Nationwide agents, the carrier said, will be reviewing options with customers to move affected policies to other personal lines carriers over the next several months.

Most affected policyholders may receive an offer for personal lines coverage from Security First Insurance, but the final choice of alternative coverage remains with the policyholder, Nationwide said.

Mr. Rommel said, "We understand it is a challenging time for customers in the state of Florida. We are doing all we can to equip our agents to meet the needs of our policyholders under these circumstances."

The OIR statement said that the company was not required by law to submit notice of non-renewals and had not done so.

OIR said it is "unfortunate that this is largely reflective of what most of the private property insurance market in Florida has been doing."

It noted that the legislature recently made it much easier for a policyholder to obtain a policy with the state's insurer of last resort, Citizens Property Insurance Corporation, and has decreased Citizens rates substantially to put them in direct competition with prices being offered in the private market.

"It is apparent that much of the private companies are displeased with this, as it will put much of their more lucrative business at risk for being taken by Citizens. However, the increase in competition and lower-risk policies in Citizens is necessary to ensure adequate claims-paying capacity and provide reasonable costs for policyholders left behind by the private market."

This article updated Aug. 30, 9:12 a.m.