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USAA says it will limit new policies, end 27,000

Insurer says Florida market is 'untenable.'

By Tom Zucco, Times Staff Writer
Published April 13, 2007

The United Services Automobile Association Group, Florida's fourth-largest property insurer, said it will significantly restrict the number of new homeowner, fire and renter policies it sells in the state and begin dropping about 27,000 policies on second homes.

USAA will now sell only new homeowner or renter insurance for the primary residences of active members of the military required to move to the state pursuant to military orders. The company will continue to underwrite a member's primary residence in Florida, as long as it is currently insured by USAA.

But in about three months, the company will stop renewing the policies of 10 percent, or about 27,000, of its members who maintain two residences in Florida. The intent is to ensure that USAA customers in Florida hold only one property policy.

USAA chairman and CEO Bob Davis cited an "untenable insurance market where we are not allowed to charge the appropriate amount for the risk."

USAA joins a growing list of major property insurers, including Allstate, Nationwide and Liberty Mutual, that have dropped large blocks of Florida policies within the past year, often leaving state-backed Citizens Property Insurance as the only alternative.

"It USAA is a fine company and I would encourage them to continue to cover our veterans," Gov. Charlie Crist said Thursday. "But if they don't, Citizens gets stronger every day, so that's the good news."

USAA has about 270,000 policyholders in Florida, including about 60,000 in the Tampa Bay area, and is open only to current and former military personnel and their families. Based in San Antonio, Texas, and operating in Florida as USAA and USAA Casualty Insurance Corp., the company has assets of $13.1-billion and made $138-million in underwriting profit in Florida last year.

But company officials said that over the past decade, USAA paid about $220-million more in Florida homeowners insurance losses than it collected in premiums.

The company said Florida policyholders account for 49 percent of USAA's total exposure to risk, but make up only 9 percent of USAA policyholders.

State regulators last year rejected the company's proposed 40 percent rate increase, settling instead for a 16 percent increase.

"State government leaders created an impossible environment for insurers in Florida," USAA spokesman David Snowden said Thursday.

Times staff writer Steve Bousquet contributed to this report. Tom Zucco can be reached at zucco@sptimes.com or 727-893-8247.

[Last modified April 12, 2007, 22:41:01]