78,000 FL Property Homeowners To Lose Insurance coverage Protection On July 15

FLORIDA — About 78,000 Florida property homeowners may very well be dealing with probably the most lively months of the Atlantic Basin hurricane season with no insurance coverage for his or her houses and companies.

The Florida Division of Monetary Providers overseen by Florida Chief Monetary Officer Jimmy Patronis filed a petition late Monday within the 2nd Judicial Circuit Court docket in Leon County declaring the Tallahassee-based Southern Constancy Insurance coverage Co. bancrupt, or unable to pay the money owed it owes.

Accredited by the decide, this declaration permits the insurance coverage firm to cancel all property insurance coverage insurance policies written in Florida efficient at 12:01 a.m. July 15.

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The Florida Division of Monetary Providers is the court-appointed receiver for the corporate and can oversee the insurance coverage firm’s liquidation.

With the prospect of getting no insurance coverage on their properties six weeks into the 2022 hurricane season, property homeowners and their insurance coverage brokers are scrambling to exchange their insurance coverage protection. (See the small print of Southern Constancy’s rehabilitation and liquidation on Patronis’ web site.)

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After the liquidation order was filed, the Florida Insurance coverage Warranty Affiliation (FIGA) was activated to assist pay excellent claims for Florida property and casualty insurance policies and refund premiums paid to Southern Constancy for protection this 12 months.

Since lots of Southern Constancy’s clients have already paid their premiums for the 12 months, Southern Constancy has been ordered to course of and ship its unearned premiums data to FIGA. FIGA stated it expects to situation reimbursement to clients inside 45 to 60 days from the liquidation date.

Based on Insurance coverage.com, the common premium for householders insurance coverage insurance policies in Florida is $3,643 for a coverage with a $1,000 deductible on a house valued at $300,000.

FIGA receives a portion of its funds out there to pay out premium reimbursements and unprocessed claims from the belongings of the bancrupt insurer.

The opposite supply of funding is from its membership, made up of insurance coverage firms which are nonetheless doing enterprise in Florida.

These funds are administered by a board elected by the warranty affiliation members and authorized by Patronis, who additionally had an appointee on the affiliation.

Southern Constancy Newest Insurer Declaring Insolvency

Exacerbating an ongoing property insurance coverage disaster in Florida which led to the Florida Legislature calling a particular session on the finish of Could, Southern Constancy is the fourth property insurance coverage firm working within the state to be declared bancrupt since February as a result of they have been unable to safe reinsurance for the upcoming hurricane season.

“Reinsurance” is the observe of discovering a number of insurers to imagine one other insurance coverage firm’s threat portfolio.

Different insurance coverage firms embody St. John’s Insurance coverage Firm Inc., which was liquidated Feb. 25; Lighthouse Property Insurance coverage Corp., positioned in receivership April 5; and Avatar Property and Casualty Insurance coverage Firm, which was liquidated March 14, in response to Florida Chief Monetary Workplace Jimmy Patronis.

Moreover, The Florida Workplace of Insurance coverage Regulation authorized Federated Nationwide Insurance coverage’s request to drop 68,000 of its property insurance coverage insurance policies, almost half its Florida clients, and Lexington Insurance coverage Co. can be pulling out of the state altogether as of Aug. 1.

In November, United Property and Casualty Insurance coverage Co., one of many high 10 householders insurers in Florida with greater than 180,000 policyholders, introduced it will cease writing new insurance policies in Florida as of Jan. 1. Moreover, the insurer requested a 14.7 p.c price improve.

Shortly after, two extra carriers, Florida Farm Bureau and TypTap Insurance coverage, reported the state that they’d not write new hearth insurance policies for householders in Florida. They have been adopted by United, Individuals’s Belief, Common, Heritage, Progressive, Safeport and Wilshire insurance coverage firms, which have all stopped writing new insurance policies in elements or the entire state.

In the meantime, Progressive Insurance coverage notified the Florida Workplace of Insurance coverage Regulation that it will not renew insurance policies for houses with shingle roofs which are 16 years previous or older, impacting about 56,000 policyholders.

Individuals’s Belief Insurance coverage, based mostly in Deerfield Seashore, notified policyholders in February that it will not do enterprise in eight south and central Florida counties, whereas Common North American introduced a 14.9 p.c price improve efficient Feb. 22.

Final 12 months, Gulfstream Property and Casualty Insurance coverage Co. was liquidated on July 28 and American Capital Assurance Corp. on April 14.

The information of Southern Constancy’s insolvency comes two weeks after the deadline for property insurance coverage firms to submit reinsurance plans to ranking businesses and the state’s Workplace of Insurance coverage Regulation.

Demotech, the state’s insurance coverage ranking firm, was finishing all opinions of the state’s property insurance coverage firms final week. The Ohio-based actuarial agency introduced March 26 that it had affirmed 37 of the 46 insurance coverage firms writing insurance policies in Florida that it charges. (To see which Florida insurers have acquired rankings from Demotech, click on right here.)

Florida Commissioner of the Workplace of Insurance coverage Regulation David Altmaier stated Southern Constancy remains to be in lively negotiations with different property insurers to take over the corporate’s polices.

“Southern Constancy has represented that it’s in lively negotiations with different property insurers to effectuate the transition of some or all of Southern Constancy’s insurance policies to that insurer as a part of a wind-down plan,” he wrote in a June 3 consent order.

Nonprofit Residents Property Insurance coverage Inundated

It is doubtless the state-backed Residents Property Insurance coverage Corp. will choose up a number of the insurance policies though the insurer stated it has been inundated as a result of property homeowners are not capable of finding insurers within the non-public market.

Meant to be an “insurer of final resort,” the nonprofit Residents Property Insurance coverage Corp. was fashioned by the Legislature after an unprecedented 9 hurricanes and 11 tropical storms ravaged Florida between 1992 and 2018, leading to greater than $216 billion in property injury.

Unable to pay out the barrage of claims, insurance coverage firms started pulling out of Florida, dropping coverage holders and elevating premiums.

As a substitute of being the “insurer of final resort,” Residents has develop into one of many high underwriters in Florida, writing about 6,000 new insurance policies per week.

One week, Residents wrote 12,000 insurance policies in a single week, with about half these clients looking for protection from Residents when Lighthouse went into receivership, dropping 893,000 polices as of June 13, stated Michael Peltier, spokesman for Residents Insurance coverage Corp.

Residents Chief Working Officer Kelly Booten stated throughout a gathering final week that Residents wrote about 13,000 insurance policies for former clients of Avatar Property & Casualty Insurance coverage Co., or about 39 p.c of the insurance policies Avatar had within the state.

As of Could 31, Residents had 883,333 insurance policies, up from 463,247 insurance policies two years earlier, making it the second largest supplier of property insurance coverage in Florida.

“Residents Property Insurance coverage has seen a rise of 399,822 insurance policies because the starting of 2020 and is on observe to have greater than one million insurance policies by the top of this 12 months,” Gov. Ron DeSantis stated.

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Insurance coverage Reforms From Particular Legislative Session

Whereas the Legislature determined throughout Could’s particular session to switch $2 billion usually income to the Reinsurance Help Program for struggling insurance coverage firms to entry, the funds include a sequence of caveats.

They will solely be used for hurricane injury, not wind or a tropical storm, and insurance coverage firms requesting the funds should agree to cut back buyer charges by June 30. Due to this fact, few insurers are making use of for the funds.

Nonetheless, DeSantis touted the particular session for enacting crucial laws to offer householders reduction.

“This package deal represents probably the most vital reforms to Florida’s householders insurance coverage market in a era,” stated DeSantis. “These payments will assist stabilize a problematic market, assist Floridians harden their houses by the My Secure Florida Dwelling Program, and pave the way in which for extra decisions for householders.”

Senate Invoice 2D, which works into impact July 1, enacts measures to alleviate rising insurance coverage prices, will increase insurance coverage declare transparency and cracks down on frivolous lawsuits, which drive up prices for all Floridians.

What Occurs Subsequent?

Owners should not anticipate to obtain fast refunds on the premiums they paid to Southern Constancy this 12 months.

The insurance coverage firm should first liquidate and switch its data to the receiver (the Florida Division of Monetary Providers) for processing. This may take wherever from six to 24 months, in response to FIGA.

Afterward, the data can be despatched to FIGA for applicable motion.

“FIGA, coordinating with the receivers of the liquidating firms, works exhausting to keep away from delays, however it’s not unusual for delays of 30 to 60 days after the order of liquidation,” stated FIGA on its web site.

Property homeowners should not anticipate a full cost of their excellent claims with Southern Constancy from FIGA, nevertheless. The utmost quantity FIGA will cowl is usually $300,000 per declare. A further $200,000 is obtainable for constructions and contents on householders’ claims. (For extra data on FIGA’s declare dealing with see the FAQ part of the FIGA web site.)

Till additional discover, policyholders with questions relating to Southern Constancy ought to proceed to go to the corporate’s web site at Southern Constancy or contact the corporate immediately at 866-874-7342 for customer support or 866 722-4995 for claims.

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