Two Bancassurance Companies Lose Ratings; Florida OIR Provides Information on Backstop

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Financial analysis firm Demotech has withdrawn the settlement of two other Florida property insurance companies, Bankers Specialty Insurance and First Community, both part of Bankers Insurance Group.

Meanwhile, the government’s Office of Insurance Regulation has sent answers to questions about the new market regulation that makes Citizens Property Insurance Corp. being a type of reinsurer, available to pay other claims if carriers become insolvent. The agency said that so far, one insurance company, United Property & Casualty, has chosen to participate in the program.

Demotech on Monday announced that United’s financial stability has been downgraded from “A Exceptional” to “M Moderate”. The reduced rates are said to be unacceptable to the secondary mortgage market, which could force some mortgage holders to find a new carrier or be forced to impose higher rates. The OIR said the Citizens plan temporarily takes advantage of an exception to the lending industry’s rules and prevents the rating problem.

“An unprecedented solution would allow insurers to meet the requirements of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac) and ensure that Floridians can maintain coverage during hurricanes,” OIR said on its website Tuesday.

Citizens would be left behind, using a reduced method, for reasons that are not paid by the Florida Insurance Guaranty Association if the insurance is placed at the reception. “The provisions indicate that if the insurer has an insured who accepts, by acceptance, 100% of the insured’s liability or any loss that is paid, but not paid by the insured, due to failure, it meets the requirements of Fannie Mae. and Freddie Mac,” OIR explained.

To implement the insurance plan, OIR said it will issue a regulation authorizing and identifying participating companies. “Participating companies have been approved by Citizens and provide this to policyholders. There is nothing to do on behalf of the consumer or agent for the arrangement to work.”

The state’s insurance consumer advocates also posted a website with information about Demotech ratings and the Citizens’ reinsurance plan.

It was not immediately clear whether Bankers Specialty, First Community and two other Florida insurance companies that lost their Demotech votes this week will sign a permanent citizen-backed settlement. Officials at Bankers Insurance Group could not be reached for comment Wednesday.

Bankers Specialty, located in St. The bank announced two months ago that it will stop writing new personal loan policies in Florida, starting June 15, but will remain open to commercial lines. As of Wednesday morning, Bankers Insurance had an “A,” according to Demotech.

In an interview with Insurance Journal, Bankers President Rob Menke said in June that the carrier has been losing money on homeowner policies in Florida for five years, and that board members tend to leave the country. He said some of the challenges the company has faced are unexpected price increases in recycling this summer.

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