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Cotton States Insurance seeks to pull out of Florida market

Atlanta-based Cotton States Insurance has filed with regulators to pull out of the Florida market after nearly 50 years, saying the cost of doing business has become too steep.

The insurer has about 30,000 policies statewide, a mix of homeowners and auto policies, with much of its business centered in Tallahassee. It has just a handful of policies in the bay area.

Founded in 1941, Cotton States Insurance moved into the Florida market about 20 years later, spokeswoman Chris Anderson said.

Assuming the Florida Office of Insurance Regulation approves its withdrawal, Cotton States would start non-renewing policies as soon as November and complete its pullout within two years. Its life insurance policyholders won't be affected, she said.

Anderson cited several reasons for the withdrawal, including tough competition since the insurer's market share of 0.2 percent was so small and rising costs of reinsurance — the added layer of coverage that insurers buy to protect themselves from catastrophic losses like hurricanes.

"The cost of maintaining our current business is not proportional to the amount of premiums earned in Florida," she said.

Despite a lack of recent hurricanes, numerous property insurers have complained of rising costs — both higher reinsurance and higher claims payouts — and have been filing for rate increases to offset them. Florida Insurance Commissioner Kevin McCarty has approved a smattering of rate increases since early 2009, and several large requests are pending.

The board of state-run Citizens Property Insurance recently endorsed an average 8.4 percent homeowners rate increase statewide. Separately, Allstate is seeking double-digit rate hikes for its two Florida subsidiaries (formerly Allstate Floridian). It filed for an average 33 percent statewide rate increase for its Castle Key Insurance policyholders and an average 18 percent increase for Castle Key Indemnity policyholders.

Cotton States Insurance seeks to pull out of Florida market 08/13/10 [Last modified: Friday, August 13, 2010 8:33pm]
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