Florida Property Insurance Updates

Florida Governor Ron DeSantis announced on April 18, 2022 that he will call the state legislature back for a special session in May  to address the worsening property insurance crisis in the state.  Excessive litigation, soaring premiums and a shrinking availability of property insurance  in the state has drawn an outcry from property owners and legislators. Members of the legislature had been asking the governor for a special session. Three Florida insurers have become insolvent in 2022 with several more insurers in dire financial condition.

FedNat Insurance Company was downgraded to “S” Substantial by Demotech on Friday. Demotech is a ratings agency that assesses the financial stability of insurers of all sizes from the smallest carriers including start-ups to the established insurers. Ratings downgrades have been a precursor to possible regulatory action, however at the present time it appears that FedNat still has adequate reserves to meet their current obligations. The downgrade may also complicate their standing with mortgage issuers as many will not accept less than an exceptional “A” rating. In addition, the downgrade may affect their reinsurance situation come renewal time. FedNat had pulled out of other states to concentrate on Florida with many of the losses attributable to the downgrade coming from weather related claims in Louisiana and Texas. The Louisiana Insurance Commissioner last week proposed a $173,000 fine on the company as result of a recent unfavorable market conduct exam. The company had 168,000 policies in force in Florida as of the end of third quarter 2021.