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Insurer Will Drop 40,600 Policies Nationwide

August 29, 2007 Wednesday FINAL

SECTION: CENTRAL FLORIDA BUSINESS; FLORIDA; Pg. C1

LENGTH: 522 words

HEADLINE: Insurer will drop 40,600 policiesNationwide said the cuts will hit
homeowners throughout the state starting in January.

BYLINE: Anika Myers Palm, Sentinel Staff Writer

Florida's fifth-largest homeowners insurer said Tuesday it will drop more
than 40,000 of its policyholders.

Columbus, Ohio-based Nationwide Insurance will not renew about 39,000
homeowners and 1,600 commercial-property policies beginning in January. The
company also said it was seeking approval from the Florida Office of
Insurance Regulation to withdraw fire coverage for about 7,500 second homes
and rental properties.

Nationwide spokesman Eric Hardgrove said the reductions would affect
policyholders throughout the state -- including Central Florida.

"We looked at several different things, such as the value of the property,
distance from the coast, age and the potential to be hit by a catastrophic
storm," he said. "Those were all the factors; it wasn't just one single
factor."

After the reductions, Nationwide will have 506,000 Florida policies,
including 176,000 homeowners policies. The company also offers auto, life
and health insurance.

"It's a tough choice that we're making now to make sure we can be here for
our remaining customers," Hardgrove said.

The service changes come just more than a month after State Farm Insurance,
the state's largest insurer, said it would drop about 50,000 homeowners
policies, mostly in the state's risky coastal areas.

Homeowners affected by the Nationwide withdrawal will begin receiving
notifications in September. The reductions do not affect policyholders
during what remains of the 2007 hurricane season.

The hurricane season began June 1 and ends Nov. 30.

"We understand it is a challenging time for customers in the state of
Florida," Jeff Rommel, Nationwide's regional vice president of Florida
operations, said in a news release about the reductions.

The company hopes to ease the dropped policyholders' ire by helping them
review options for finding new coverage. Most of the affected homeowners
also can expect to receive offers for coverage from Security First
Insurance, which is one of several carriers the company has contacted about
their availability to pick up Florida policies, Nationwide said.

Florida homeowners' general unhappiness with insurance companies stems from
rate increases after the busy 2004 and 2005 hurricane seasons. In a special
Legislative session in January, the state agreed to offer cheaper
reinsurance to insurance companies, saying the insurers would be able to
pass their reduced costs on to homeowners.

Reinsurance is the coverage that insurance companies buy to help them pay
claims after storms.

Instead, insurers have struggled to reduce premiums in line with state
expectations and charge rates in line with the risk they think they're
taking in the nation's most hurricane-prone state.

State regulators lately have signaled a willingness to take a closer look at
insurers that have reduced coverage to the state's homeowners.

State Insurance Commissioner Kevin McCarty this month summoned State Farm to
a public hearing to discuss its decision to drop policies.

The hearing later was postponed. CONTACT: Anika Myers Palm can be reached at
apalm@orlandosentinel.com or 407-420-5022. Information from The Associated
Press also was used in this report.

LOAD-DATE: August 29, 2007