Florida Homeowners Shifted to a Different Insurance Company

26 Feb

Florida’s property insurance market hit a new snag this month as tens of thousands of people will be shifted to a different insurance company in the spring due to the insurers financial trouble. 

Insurance regulators announced on Monday that they had reached an agreement to move 43,000 policyholders from Anchor Property and Casualty Insurance Co. to Homeowners Choice Property and Casualty Insurance Co. effective April 1. The move was necessary due to a financial stability rating that was downgraded. 

The downgrade means that that Anchor’s policies would no longer meet the requirements of mortgage companies, according to the agreement between the state Office of Insurance Regulation and the two companies. All mortgage companies require property insurance as part of a loan. 

“The Office of Insurance Regulation finds approval of the agreement is in the best interest of policyholders because it provides continuous uninterrupted coverage for Anchor policyholders and is in the best interest of the public since it minimizes market disruption and provides a private market solution,” the consent order between the Office of Insurance Regulation and the two companies said. 

Home Insurance Industry in Trouble

There have been a number of indications that the homeowners insurance market is less than healthy. An industry rating company warned of more rating downgrades in December and at least three insurers have filed rate increase requests of over 20 percent, indicating financial trouble. Industry critics also point to the fact that there are still ongoing claim disputes related to Hurricane Michael which hit parts of Northwest Florida in October 2018.

Sen. Jeff Brandes, recently raised the possibility of having to hold a special legislative session this year on insurance issues.

“I think the insurance market in many ways, it has the coronavirus and is not healthy at all,” Brandes said in a recent Banking and Insurance Committee meeting “As we’ve seen a variety of companies go under in 2019 largely because of roof claims or other lawsuits. We’re seeing a rapid increase in the amount of litigation going on. And understand, we had no storms in 2019. We’ve also seen insurers file for a number of rate increases. We’ve had rate increases between 22 percent and a 40 percent or 45 percent have been filed and have had rate hearings in the last few weeks. So, I think it’s important to notice that the market is not healthy at all, and it is struggling to find its footing in this space.”

In the 2019 legislative session, Florida lawmakers finally passed a law that put additional restrictions on the “assignment of benefits” clause in homeowner policies. Abuse of the AOB clause by less than honest contractors has been blamed for the dramatic increase in homeowners insurance costs, especially water damage claims. 

However, it is now becoming clear that the financial issues in the Florida insurance market may extend beyond the cost of AOB abuse. The increased cost of reinsurance is one of those factors. Reinsurance is simply backup coverage for insurers and has been necessary due to severe weather claims in the state. 

Rate Increase Proposals

The Office of Insurance Regulation has dealt with a number of rate increase proposals in recent months and held a hearing on Friday regarding a proposed 28.1 percent average rate increase for homeowners with National Specialty Insurance Co. During the hearing, company representatives made the cost of reinsurance costs and wind risks the main reason they need the rate increase.

While regulators have not made a decision on the National Specialty Insurance Co. proposal, they did approve a 21.9 percent rate hike by Edison Insurance Co last month. There is also a pending proposal for Capitol Preferred Insurance Co. that includes a major rate increase. 

According to the consent agreement for Anchor Property and Casualty, the company had net losses of $29.8 million, $22.7 million and $5.7 million in financial statements filed with the Office of Insurance Regulation for 2017, 2018 and 2019.

The agreement for Anchor Property and Casualty allows Homeowners Choice to provide replacement policies to their customers with premiums that were paid to Anchor. As the policies expire homeowners will be able to renew with Homeowners Choice but coverage terms could change. 

“OIR thoughtfully and carefully reviews these agreements to ensure policyholders are protected,” state Insurance Commissioner David Altmaier said in a recent press release. “I am committed to ensuring policyholders have continuous coverage throughout this process and have directed insurers to communicate clearly and use every resource to help them navigate this change.”

At HomeInsuranceKing.com, we help Florida homeowners shop and compare the best rates and coverage options for your home. For only rates, please start your Florida home insurance rate quote now or give us a call at 888-685-4704. We look forward to help you!

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