In response to the potential ratings downgrades of 17 property insurers by Demotech, the Florida Insurance Department announced a special temporary reinsurance program with Florida Citizens Property Insurance Corporation (Citizens). This arrangement would allow those policyholders whose insurers have been downgraded below the required “A” rating with mortgages backed by Fannie Mae and Freddie Mac to meet an exception offered by those secondary lenders and maintain coverage during hurricane season.
Per the department, Fannie Mae and Freddie Mac have an exception to their ratings requirements for an insurer who is reinsured by a company who reinsures, by endorsement, 100% of the insurer’s liability for losses payable, but unpaid by the insurer in the event of insolvency. They have stated that the Florida Insurance Guaranty Association (FIGA) would provide their statutory protections to the insured’s of an insolvent insurer. This temporary program appears to provide additional coverage in the form of 100% reinsurance for any amounts not covered by FIGA.
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