MoneyReal Estate News

Actions

Demotech postpones announcement of Florida home insurance companies' rating downgrades

Growing number of insurance companies ending coverage in Florida
florida homes.PNG
Posted at 3:57 PM, Jul 26, 2022
and last updated 2022-07-26 18:19:27-04

WEST PALM BEACH, Fla. — The list of property insurers in Florida that had been flagged by a national ratings company is still being kept a secret — for now.

The rating agency Demotech, which is based in Ohio, pulled back on announcing the approximately 20 companies in danger of a rating downgrade.

Demotech said are holding off on making the list public to allow for more time to review the finances of the companies.

"We will continue to follow our rating methodology and remain an independent observer despite outside pressure," Demotech said.

"The thing to remember is nobody knows the list of companies," Robert Norberg of Arden Insurance in Lantana. "We as agents don't have access to it."

Robert Norberg, Arden Insurance speaks about Florida insurance companie
Robert Norberg of Arden Insurance in Lantana speaks about the growing number of home insurance companies no longer doing business in Florida.

Norberg is eager to learn which companies are on the list.

"At the end of the day, what I'm telling my clients is be prepared but also don't panic at this point," Norberg said.

SPECIAL COVERAGE: Priced Out of Paradise

Demotech also indicated they are in no hurry to identify the companies.

"We will be taking additional time to review information and consider the issues affecting the companies operating in Florida," Demotech said in a statement.

RELATED: Homeowner insurance crisis could worsen as more companies downgraded

Demotech statement about insurance company downgrades, July 26, 2022
Demotech says they are still reviewing the financial health of companies before releasing the latest ratings.

"These are all admitted carriers, which means the policyholders shouldn't panic," Norberg said. "Because if their company gets downgraded and eventually goes out of business, they will have claim payment through the Florida insurance guarantee fund, so there is that backstop."

Any comfort from that may be lost among the 23,000 policyholders with Bankers Insurance Group based in St. Petersburg.

The company that had been in business for about 50 years has suddenly stopped its businesses in Florida, citing increasing litigation in the state and no way to remain profitable.

In paperwork filed with the state, Bankers Insurance Group said they can no longer be profitable citing, "high reinsurance and catastrophe costs and increased litigation costs."

"I think it's another step in the bigger problem of all these domestic carriers," Norberg said. "I think we will see more of this happening."

Florida's insurance market has been in turmoil for a while, even after state lawmakers called a special session earlier this year to try and address issues.

"There's absolutely a feeling that if we had one bad storm here in the state of Florida, it would destroy the market here," state Sen. Bobby Powell, D-West Palm Beach, said. "It is nearly already destroyed because we've had a number of insurers leave the state of Florida."