The ratings agency plans to downgrade 27 Florida home insurance companies

TALLAHASSEE – CBS4 has learned that the regulator wants to take down 27 of Florida’s 40 home insurance companies.

It’s a move that could force millions of homeowners across the country to pay more, even forgoing the search for new insurance.

“It’s really affected the market down here, the real estate market, the housing market, everything,” said Alex Ray, Director of Marketing and Sales for John Galt Insurance.

“It’s kind of scary, to be honest,” added Parkland resident Gordon Light.

He has lived in Parkland for nearly three decades. Most recently, two different insurance companies dropped him last year, including the state-owned Citizens.

“All of a sudden, I get a notice to cancel, to cancel, and I’m going, are you sure,” added Light.

Several insurance companies have canceled his insurance, and he has been paying thousands a year in insurance premiums.

“I don’t know what needs to be done, but there are other things that need to be done,” said Light.

John Galt Insurance contacted Light to create a new policy.

And based on the results, Ray expects demand to grow by millions in Florida.

But it’s not too bad.

“The problem is that people have to sell their houses because they can’t afford insurance,” said Ray.

It looks worrisome depending on how the Demotech company will lower the 27 insurance rates to “S” for growth or “M” for medium.

Big picture: If a borrower is backed by Fannie Mae or Freddie Mac, they won’t accept anything less than an “A”.

Ray adds that people may be at risk of defaulting on their mortgage.

“Being forced to get other insurance in this market or getting forced insurance from the lender,” Ray said.

Ray says mandatory mortgage insurance is expensive and offers little coverage.

And with unqualified insurers, “trying to add all these regulations that need to be rewritten is not a viable option,” Ray said.

Superintendent Danny Perez says he understands the financial struggles homeowners face.

“Anything that can raise the prices of the homeowners” insurance market affects us,” stressed Perez.

He said that is why laws were passed at a special meeting in May to solve the problem.

“It’s disappointing to see the market in such a negative state,” Perez said.

In addition, lawmakers understood that it would take 18 to 24 months for Floridians to see positive changes. Looking for a reinsurance fund for carriers to reduce homeowner costs.

“Carriers who use the aid fund should reduce the costs by using the carriers more forcefully,” added Perez.

About the amount of carriers that will remain in the solvent remains to be seen. Ray estimates a few more will go belly up in 2022. He says insurance companies in Florida reported $1.5 billion in losses last year alone.

Ray also told CBS4 that Florida is asking state lenders to recognize the “S” from Demotech.

He adds that this would help the insurance market and the average Florida homeowner.

Demotech was supposed to release the demo on Tuesday, but CEO Joe Petrelli said pressure from government officials delayed it until further notice.

In a one-page letter, Petrelli wrote, “While we cannot provide an exact release date, we are working to expedite the release of our votes as soon as possible.”

A source told CBS4’s Joe Gorchow that a full response from Insurance Commissioner David Altmaier would come Tuesday.

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