First the obvious: Unique among its large carrier peers, Progressive participates in the Florida market and Hurricane Ian is responsible for its horrific loss ratio. But why is Progressive in that market? And what does it tell us about Progressive’s Homeowner strategy?
A large part of the reason most carriers have avoided Florida is that it’s laws governing the payment of claims from natural disasters have been slanted in favor of Florida lawyers. Progressive entered the market knowing this. So why the big losses? Was it simply an insurance mistake? Winning too much business in a hurricane vulnerable geography? Or did Progressive take a calculated risk that it would be hit by a big Hurricane so that it could get a jump on the competition in the huge and growing Florida market?
But why would anyone want to insure homes in Florida given the trial lawyer’s hammerlock on the legislature? Did Progressive bet that Florida would be forced by events to change those laws and thereby make the state much more attractive to carriers? Which Florida just did.
Could it be that Progressive considers its losses from Ian to be part and parcel of it’s investment in dominating the Florida market? That now that the laws have been changed, the market will become much more attractive. And now that it is, who is the only major carrier with a strong market position in Florida’s Homeowner’s market?
It remains to be seen whether their gamble will pay off.
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