Florida Is in the Reinsurance Market | Merlin Law Group

Florida’s Office of Insurance Regulation (OIR) gets an A+ for creativity in trying to prevent a hurricane insurance crisis, which I wrote about. Amazing! It’s Amazing To Believe Every Insurance Agent Trusts Demotechand Insurance Leader Questions Demotech’s Plans to Downgrade Florida Insurers. In a final three-point shot, OIR, in partnership with Citizens Property Insurance, is getting citizens to re-insure 17 carriers that are about to be reduced by Demotech. This design solution meets federal housing requirements.

The announcement from OIR he said:

[T]he Florida Office of Insurance Regulation (OIR) has announced a plan to implement a temporary recovery plan through Citizens Property Insurance Corporation (Citizens) in the event of disruptions to affordable insurance from Demotech, Inc. The unprecedented solution will allow insurers to meet their claims. and the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) to ensure that Floridians can be protected during hurricanes.

Fannie Mae and Freddie Mac require that property insurance for properties that have a mortgage backed by Fannie Mae or Freddie Mac must be underwritten by the insurer to meet the financing requirements.

Fannie Mae and Freddie Mac each provide an exception to the insurance money requirement provided by the insured borrower who assumes, by acceptance, 100 percent of the insurance liability for any loss that is paid, but not paid by the insured, due to failure. If an insured is declared insolvent, the Florida Insurance Guaranty Association shall perform its statutory duties under Part II of Chapter 631, Florida Statutes, and pay claims as provided.

As a result, OIR, in cooperation with Citizens, has developed a program that meets the requirements of Fannie Mae or Freddie Mac. Therefore, there should be no reason for the borrowers to demand replacement costs, or to force the delivery of the property based on the lower ratings. This temporary arrangement would keep insurers viable, continue to provide services to Floridians and help keep the law free from citizenry.

Readers of this blog know that I am Fair and Balanced. In this case, OIR should be appreciated. I’m not the only one who says that.

Paul Handerhan He is very knowledgeable and has a solid understanding of the Florida insurance market. It was written in Insurance Journal news, Florida Regulators Unveil Problem Solving: Let Citizens Reset Carrierssays:

[T]they are planning well, said Paul Handerhan, president of the Federal Association for Insurance Reform in Florida. He said it was akin to an ‘excessive endorsement’ which determined what the insurance company should do.

The downgrade may not have cost Fannie Mae much, but the new system should give lenders confidence that loans are adequately protected, Handerhan said.

Florida Insurance Commissioner David Altmaier and his staff deserve a tip of the hat and a shout out to find a solution to this problem. But this is only a temporary measure. There is much work that needs to be done to stabilize the insurance market in Florida.

No hurricanes in 2022 will help much. But it’s dangerous to build the kind of insurance business built on luck.

Thought of the Day

I have missed 9000 shots in my career. I’ve lost nearly 300 games. 26 times, I’ve been trusted to take a winning shot and missed. I have failed many times in my life. And that’s why I win.
—Michael Jordan