US Senator Marco Rubio (R-FL) waded into Florida’s property insurance crisis, calling for a review of the state’s reliance on Demotech as a regulatory agency.
Senator Rubio has sent a letter to the Director of the Federal Housing Finance Agency (FHFA) Sandra Thompson to increase her support to call on the State of Florida for FHFA to review its reliance on Demotech for insurance rates in the state.
As we reported last week, the CFO of the State of Florida, Jimmy Patronis, wrote to the Federal Housing Finance Agency and the management of Fannie and Freddie, calling Demotech a “fraudulent group” and asking the GSE’s lenders to “consider your reliance on Demotech. as a rating agency.” dynamics of the Florida insurance market.”
Rubio said it’s “deeply troubling that one financial institution could jeopardize the finances of millions of Floridians because of decisions that seem unlikely to happen.”
“While I understand your responsibility to protect the taxpayers’ money, I am joining the State of Florida to urge you to think about this matter, to reevaluate your trust in Demotech, and to ensure that everything the board does takes into account the impact of Floridians. be protected in this process,” he added.
As we reported late yesterday, the state of Florida appears to have found an alternative, albeit one that puts a lot of the burden on the shoulders of taxpayers.
The Florida Office of Insurance Regulation (OIR) has announced a temporary reinsurance program through Citizens Property Insurance Corporation, designed to assist carriers with reinsurance “in the event of financial disruption to Demotech, Inc.”
The new Citizens Sponsored Insurance Center, although details are still lacking, will help insurers meet the requirements of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), which will help ensure that Floridians can maintain their protection during storms.
So Rubio’s letter may have been mistimed, as it was published on the same day as OIR’s new reinsurance announcement.
But Rubio is sticking to Demotech, saying his polls “look questionable based on expectations of future policy changes rather than current evidence.”
Rubio added that the Florida legislature has taken “several measures to strengthen the property insurance market” in recent months, referring to the special property insurance reform that was enacted.
“It’s very troubling that one investment management agency could jeopardize the financial fortunes of millions of Floridians because of decisions that appear to be frivolous,” he added, urging the FHFA to “review and reevaluate your trust.” at Demotech,” making sure it sees “the concerns of Floridians.”
How can you get it all out?
Well, what’s really troubling, to use Rubio’s words, is that no one in Florida’s leadership or legislature seems willing to admit that special education reform hasn’t gone far enough, or that more needs to be done.
Although at the same time everyone talking about this says that they want to protect Floridians, but now with the new reinsurance plan from OIR the Floridian taxpayer could be more on the hook if a hurricane destroys the country this year.
Although this was inevitable, no information has been given about how this new facility, with the help of Citizens, will work, be written, or what risk this will pose to the Floridian taxpayer in the event of a major loss, such as. as a 1-in-100-year hurricane, it is also troublesome.
It seems that the Citizen supported solution can bring a great burden to the taxpayers, as the Citizen owns the financial system means a big storm can cause the calculations to be paid, all policyholders and all other private policyholders market (so many taxpayers).
At this time we do not see the extent of the expansion of Citizens with this plan, whether Citizens can provide these resources, or buy reinsurance or disaster bonds, or if the risk of additional assets in Florida has not occurred. through the hurricane season.
Finally, how long should such a place last?
It appears that the intention of the legislators may be to have the FHFA and GSE accept a reduction in the amount of property insurance to sell coverage to the owners of the rented property, because there does not seem to be any other way out than to change the property. market conditions and capital adequacy of critical carriers.
As we’ve said before, lawmakers must not lose sight of the long-term and critical need to make Florida’s property insurance market a better place and one that doesn’t just rock and roll year after year. .
It makes sense that Demotech should be part of that solution and can help lawmakers try to understand how the rating system works and how some of Florida’s carriers are so limited.
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