November 23, 2022
  • November 23, 2022

Florida agency downgrades ratings of 4 property insurance companies

By on August 2, 2022 0

In Florida, “A” rated companies show financial stability.

TAMPA, Fla. — Florida ratings firm Demotech has confirmed that four insurance companies have been downgraded.

Demotech told 10 Tampa Bay that these four companies were downgraded:

  • Florida Family Insurance Company – Aʹ (A Prime) to A
  • Florida Family Home Insurance Company – Aʹ (A Prime) to A
  • Ocean Harbor Casualty Insurance Company – Aʹ (A Prime) to A
  • United Property & Casualty Insurance Company – A to M (“M” meaning moderate)

In Florida, “A” rated companies show financial stability.

Demotech lists Weston Property Insurance and FedNat as unrated.

An insurance expert who works for the Insurance Information Institute, Mark Friedlander, said that in most cases no rating means the company could go into liquidation.

So what does an unrated company mean to an insured? This is problematic for Floridians because a home insurance company needs an “A” rating to comply with federal mortgages.

In most cases, people will have to find a new company to insure themselves.

“You are now in disagreement with your mortgage contract, so you need to transfer your coverage to another ‘A’ rated company,” Friedlander said.

In Florida, Friedlander said there are about 50 home insurance companies.

When businesses are downgraded and a new one has to be found, others already have too many customers. This leaves people scrambling to find insurance.

Friedlander said people should come prepared and speak with officers ahead of time, especially during hurricane season, and having insurance is so vital in the event of a storm.

Florida residents already pay more money for insurance than in other states, officials say. The Insurance Information Institute estimated that Floridians pay three times the average for other states, averaging $4,231 per year. The US annual average is $1,544.

What do you do if your insurance company is downgraded? If you can’t find another company, people can turn to the state-regulated and run option called Citizens Property Insurance Corporation, however, experts said this should be used as a last resort.

Friedlander said Citizens currently has $6.7 billion in reserves and $11.3 billion in claims-paying capacity.

Because it’s regulated by the state, Friedlander also said citizens can’t charge as much as a private insurance company. While that sounds great, if a storm were to hit and cash was needed, the company could charge policyholders extra.

Yet another problem for Floridians with this option is, Friedlander said, that Citizens has about a million customers. Taking into account the new customers of downgraded insurance companies, that’s a lot of people to manage for a single company.

There are other programs in place to help you if needed.

“The Florida Hurricane Catastrophe Fund kicks in if a business is unable to pay all of its claims from a hurricane,” Friedlander said. “There is also the Florida Insurance Guarantee Association which pays claims from insolvent insurers.”

If your business has been downgraded, experts advise contacting your local insurance agent to help navigate your next steps.