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The recently signed property insurance reforms in Florida may not be enough to save the insurance companies already in trouble in the state. The ratings agency Demotech indicated that perhaps up to 25 more Florida property insurers may be in financial trouble because it will take up to 18 months for the full effects of the reforms to be felt by insurers and consumers alike. Additionally, the reforms do not address all issues facing the property insurance market in the state, but are a step forward.

With the state facing potentially more insurance company failures, the insurance department will be looking at any possible alternative arrangements to ease the burden of an insolvency on the Florida Insurance Guaranty Association (FIGA), insurance companies, and consumers in the state. While FIGA provides a vital backstop in the event of an insurance company failure, it does have yearly limitations on assessment capacity which is capped at 2% of annual written premiums for the year preceding the insolvency in the “other” account. This includes all insurers writing all covered lines of business in the state other than auto, workers compensation and excluded lines (example: Surety and Ocean Marine).

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