homeowners insurance

Several Florida Insurers Facing Financial Stability Rating Downgrades

Two property companies in Florida have lost their financial stability ratings.

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The volatility in Florida's property insurance market is showing no signs of easing up.

Just this month, Demotech, an insurance rating agency, withdrew its financial stability ratings for FedNat and Weston Property and Casualty Insurance, two companies based in South Florida.

"Typically that is a sign that a company is headed toward receivership and liquidation based on our history here in Florida," said Mark Friedlander of the Insurance Information Institute.

Friedlander said FedNat has asked to transfer its 84,000 policyholders to another company.

As for Weston Property and Casualty, a day after the rating was dropped, the state filed an affidavit, saying in a letter "...one or more grounds exist ... to initiate delinquency proceedings against Weston Property & Casualty Insurance Company ...".  You can read the referral letter and affidavit here.

Friedlander said the Coral Gables-based company has about 20,000 policyholders across the state.  If you are one of them, he said you should call your insurance agent.

"Ask them to start shopping your policy because it's good to be prepared," he said. "Because once the state takes action and this is a court-mandated action where they will place the company in receivership and liquidation, you will be given 30-days' notice to  move your policy."

NBC 6 reached out to both FedNat and Weston Property & Casualty but did not immediately hear back.

Friedlander said mortgages backed by Fannie Mae or Freddie Mac typically require insurance coverage by an A-rated company, if they are only rated by Demotech.  That's why if a company loses its financial stability rating or if it is downgraded lower than an A, it could be problematic for that company and its policyholders.

Meanwhile, Demotech downgraded the financial stability rating for United Property and Casualty, also known as UPC, two levels down from an A rating to an M rating.

"Which typically it is a level that  makes it very challenging to write homeowners policies in Florida," Friedlander said of the M rating.

NBC 6 could not reach UPC but the state says the company has qualified to participate in the newly-created temporary market stabilization agreement. It is a program the state announced last week that allows insurance companies facing a rating downgrade to meet the requirements set by federally-backed mortgages. You can read more about the program here.

If you would like to look up the financial stability rating of your homeowner's insurance company, you can do a search on Demotech's website by clicking here.

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