Property insurance companies continue to lose customers in Florida

TAMPA, Fla. – As Florida homeowners wait for a special session on property insurance reform to convene in May, more insurance companies are facing trouble and homeowner premiums are rising while fonts are dropped by the thousands.

As of May 1, seven property insurance companies in Florida were currently in liquidation due to financial losses. Several national companies have withdrawn from the state, and for some still in operation, their ratings are down – the latest is FedNat, which has 152,000 policies in Florida.

One of the state’s largest insurers, Fednat Insurance Group in the South Florida Sunrise area, has just filed a filing with the SEC saying it may no longer be able to continue operating because that his rating has been downgraded,” spokesman Mark Friedlander said. with the Insurance Information Institute.

The rating comes from Demotech, downgrading FedNat from an “A” or outstanding to a substantial “S”.

Their filings with the Securities Exchange Commission say “there is substantial doubt as to its ability to continue to operate under generally accepted accounting principles.”

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This prevents them from insuring homes that have federal mortgages and it also prevents them from being self-employed in most cases. This will prevent independent agents from representing them,” Friedlander explained.

This follows Lighthouse Insurance receiving an “Not Rated” from Demotech, the lowest possible rating.

Technically, it’s a Louisiana-domiciled company,” Friedlander said. “It’s a regulatory issue, so the Louisiana Department of Insurance took action against them or put them in receivership a few weeks ago, but it’s a Florida company. They’re based in Tampa and have about 27,000 owners in Florida.

Florida Strategic Insurance in Tampa Bay has about 3,000 policies with Lighthouse.

Each one needs to be rewritten,” Florida Strategic Insurance partner Mike Puffer told ABC Action News.

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In addition to the hundreds of thousands of customers being pulled from their insurance policies for having older roofs, Puffer said many companies aren’t writing new policies.

“As an agency, we write about 80% to 90% of our new business with Citizens,” Puffer explained. “The crazy thing is that Citizens is supposed to be the carrier of last resort, but they’re going back to being, if they aren’t already, the largest insurance company in the state.”

Citizens only cover homes worth up to $700,000. Puffer said homeowners are forced to look to the excess and excess market for coverage that’s often more expensive and doesn’t cover as much because companies don’t have to follow Florida guidelines.

We approached the state-backed Citizens Property Insurance Corporation to ask how they handle this weight of homeowners coming to them.

Since March, we’ve been adding about 6,000 new fonts per week. And that’s been described by our CEO, that’s kind of unsustainable growth,” said Citizens spokesman Michael Peltier. “We are, we’re supposed to be the insurer of last resort, not the insurer’s first choice.”

Peltier said their fonts were up 55% from January 2021, now approaching one million fonts.

But, it has already happened.

In 2012, Citizens had about a million, a million and a half fonts, so we were huge. Basically, after a few years of stormy seasons, you know, several years earlier,” Peltier explained. “10 years, we haven’t had any storms. Citizens saw our number of policies grow from 1.5 million to around 400,000 and the private market was booming.

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But this hurricane season is expected to be above average, which means claims could increase and that cost could fall on all Floridians.

“If by chance a big storm hits and exhausts our ability to pay, citizens are obligated to impose surcharges on our decision makers,” Peltier said. “And then if we, if a deficit is still there, then we have to take dues from Floridians, and that’s the risk we’re trying to avoid.”

Citizens are waiting to hear the decision of the Office of Insurance Regulation (OIR) regarding an 11% rate increase over the coming year.

Lawmakers have yet to release details of their plans to change the legislation for the special session or whether it will include provisions for citizens.

As for FedNat, they have submitted an action plan to the OIR on how they plan to obtain more funding.

We have contacted FedNat for comment, but have not received a response.

Friedlander said customers with them shouldn’t panic, but be prepared.

“It doesn’t hurt to call your insurance agent and say, ‘You know what, I want to play it safe. Could you get me some other quotes? Let me be ready. Let’s see which of them. another will insure our home hopefully for a similar cost under the same level of coverage.And that’s the bottom line.Whatever you do, we tell consumers not to reduce your coverage.

Friedlander said it’s a good idea for all homeowners to have their policy reassessed to ensure their home is fully covered for current inflation costs.

We analyzed that home replacement costs increased by more than 16% year over year,” he explained. So what is it going to cost more to insure your home today than it did a year ago and you need to make sure you have the right level of what is called your home cover .

LIGHTHOUSE INSURANCE UPDATES: (From the Insurance Information Institute)

  • Lighthouse was placed in compulsory liquidation by a judge in Louisiana. This is the next step after the receivership. Policyholders were told they had until May 29 to find new cover.
  • All outstanding claims will be covered by the Florida Insurance Guaranty Association.


Kristan F. Talley