Demotech warns 17 Florida carriers of slowdown, state administration responds – Artemis.bm

Rating agency Demotech has warned an additional 17 property insurance carriers in Florida that their ratings will be downgraded on July 26, a move that has already prompted criticism from the Florida State Insurance Commissioner and CFO.

Demotech sent a letter to 17 Florida insurers on Tuesday, telling them it is unlikely they will retain all of their important ratings.

Demotech said that their A ratings could be downgraded on July 26th, and that the insurers could be downgraded to S (high), or M (medium).

A higher or lower rating may not be enough for Florida property insurers to write business in the mortgage market, and with ratings below ‘A’, mortgage insurers Fannie Mae and Freddie Mac no longer accept their policies.

What could throw the property insurance market in Florida into a new turmoil, where insurers are struggling to survive and the possibility of hundreds of thousands of additional insured to get insurance with Citizens, the last insurance, or looking. of new policies.

Demotech says that 17 insurers do not meet the requirements to improve the financial strength of ‘A’, so it is necessary to downgrade them.

Florida Insurance Commissioner David Altmaier has fought back in disgust, criticizing Demotech for not complying with its obligations and not giving it a chance to renew the recently established special division.

He challenged Demotech to ensure that the downgrade was done properly and asked why more time for a response or response was not given.

However, when the time comes, these figures are already late and property insurers in Florida have had weeks to ensure that their reinsurance is prepared and that their capital is sufficient to continue the calculations.

There were always other opportunities could not, it seems that the return of the government has started and realized the extent of the problems of the Florida property insurance market.

Consider the fact that even though Demotech rated these carriers, other broadcasting organizations like AM Best do not operate in Florida as they have been saying that they do not believe that many can get enough ratings based on their criteria.

Thus, the state was well aware of the thin ice that Florida insurance carriers have been exercising, ice that has shrunk significantly in recent years and in some cases has been eroded by high reinsurance rates.

In terms of changes, which Demotech always said was not enough, the opinion that many are concerned about in the industry, how much time should be given to work?

The latest reports from CaseGlide show that Florida’s P&C insurers continue to experience high levels of litigation, including AOB and the number shows that this is not going to happen any time soon.

Should the regulatory agency allow carriers to continue to write business and provide services to customers if they have low income, do not meet the requirements and face the burden of prosecution?

Florida Insurance Commissioner Altmaier didn’t mince his words in a letter to Demotech, saying, “This is an example of the arbitrary, capricious power of the election commission and its attempt to pressure Floridians and policymakers in an attempt to thwart public policy. and his thoughts.”

He also asks why this reading matter comes almost two months into the hurricane season. But, of course, Demotech would have liked to have ended its previous comments, but the work of the law in Florida and the difficulties that the insurers have been facing in the reinsurance reform, all contributed to the release of the policy.

The real question that needs to be asked is who has enough money and has enough money to survive long term.

It shouldn’t just be a matter of trying to find insurance in the next storm, where one storm can wipe out those who are capitalized.

Imagine a scenario where a hurricane hits Florida, leaving all insurance carriers stranded and unable to drive, while others struggle to get refunds or rebuild recovery towers. This can be dangerous for public housing owners and it is the way that money flows to prevent it from happening, by testing carriers and making sure that people know their financial situation.

The CFO of the State of Florida, Jimmy Patronis, also has strong opinions, which he shared with the Federal Housing Finance Agency and the leadership of Fannie and Freddie.

He calls Demotech a “fraudulent organization” saying it has unwittingly empowered the GSEs.

He asks the GSEs to “consider your trust in Demotech as a regulatory agency for the Florida insurance market.”

Asking the GSEs to give Florida leadership time to find another audit team.

The question is, what can an accounting firm do?

If AM Best doesn’t consider rating these carriers, neither will the other major agencies.

Demotech has spent many years understanding the Florida property insurance market and any agency that came in convinced that these carriers were adequate could damage the history.

The company believes in Demotech’s opinion on carriers and if anything some say it has been less than adequate over the years and many insurers have probably failed, not least.

Patronis also warns that if the 17 insurers lose their votes and face bankruptcy or lose policyholders, it could cause “financial chaos for millions of Floridians” and expose more than 1,000 insurers to the risk of lawsuits.

Of course, Demotech is not the cause of the financial crisis.

The cuts to 17 insurers may cause chaos, but the problem has been building for years.

Instead, the blame for any chaos that occurs must rest at the feet of those who have repeatedly failed to support measures to improve Florida’s insurance market and eliminate lawsuits there.

What happens next is anyone’s guess. Demotech will have the right to respond to letters from the Insurance Commissioner and the Florida CFO, but it seems unlikely that it will change its level just to help weak insurers continue to do business, that is not his job.

It looks like the Florida property insurance crisis is getting worse, before it gets better and we will update you with more information as it becomes available.

Read all of our news and analysis of the Florida insurance and reinsurance market.