Evolve Insurance Agency has learned that Demotech, Inc., a well-known financial rating company, has withdrew their rating of 4 homeowners insurance companies in Florida and reduced a rating by 2 notches for another carrier.
Weston Insurance Company and FedNat Insurance Company had their financial ratings withdrawn on Monday, August 1st, 2022. Bankers Specialty Insurance Company and First Community Insurance Company had their ratings withdrawn on Tuesday, August 2nd, 2022. Additionally, United Property & Casualty Insurance Company (aka UPC Insurance) had their rating lowered 2 notches from "A, Exceptional" to "M, Moderate" on Monday, August 1, 2022. According to Demotech's website, a carrier with a rating of "A, Exceptional possess Exceptional financial stability related to maintaining surplus as regards policyholders at an acceptable level. Regardless of the severity of a general economic downturn or deterioration in the insurance cycle, at least ninety-seven percent of all the insurers countrywide receiving a Financial Stability Rating® of A are expected to have positive surplus as regards policyholders as of eighteen months from the initial date of rating assignment." A carrier with a rating of "M, Moderate possess Moderate financial stability related to maintaining surplus as regards policyholders at an acceptable level. Regardless of the severity of a general economic downturn or deterioration in the insurance cycle, at least ninety percent of all the insurers countrywide receiving a Financial Stability Rating® of M are expected to have positive surplus as regards policyholders as of eighteen months from the initial date of rating assignment."
Given the recent news, this comes as no surprise to us here at Evolve Insurance Agency. A little over a week ago it was reported that Demotech was planning on lowering or withdrawing the ratings of 17 insurance carriers who operate and/or do business in Florida. With the announcement of these 5 carriers, we can't rule out the possibility of more being added to this list. In preparation of this, The State of Florida's Office of Insurance Regulation (OIR) took unprecedented action last week to assist in stabilizing the market. Because a company's financial rating impacts the acceptability of their coverage to a mortgage provider, a creative solution was needed to prevent potentially millions of Florida policyholders needing to secure new coverage quickly to stay in compliance with their loan agreement. On July 27, 2022, the Florida Office of Insurance Regulation (OIR) announced a plan to establish a temporary reinsurance arrangement through Citizens Property Insurance Corporation (Citizens) in the event of disruptive financial rating downgrades from Demotech, Inc. This unprecedented solution would allow insurers to meet an exception offered by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) and ensures Floridians can maintain coverage during hurricane season.
We're still working to identify how these rating downgrades combined with the recent measures imposed by the Florida OIR will fully impact policyholders insured with carriers that have had their ratings either withdrawn or downgraded. If you are a client of Evolve Insurance Agency and are insured with one of these carriers, do not panic. We are actively and aggressively monitoring this situation and are ready to assist impacted policyholders when needed. Additionally, you can contact our office and ask to speak with an agent regarding this situation at any time by calling us at 941-244-2760.
David Kronk Jr
Owner, Evolve Insurance Agency
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