Gov. Ron DeSantis on Monday said he was confident a special legislative session will help stabilize Florida’s property insurance system, but the troubled market takes another hit as a group of companies are poised to cancel more than 68,000 policies.
“The good news is, on property insurance, I think we’re going to get some really, really big reforms,” DeSantis said during an appearance at Seminole State College in Florida.
DeSantis made the comments a week before the start of a special session on May 23 that he called to address property insurance issues that led to homeowners losing their policies and facing huge hikes. rate.
The comments also came three days after the state Insurance Regulatory Board approved a deal that will see FedNat Insurance Co., Maison Insurance Co. and Monarch National Insurance Co. cancel 68,200 policies, with notice of 45 days to the insured. The three insurers are part of the same holding company.
The agreement, known as the consent order, stated that the early cancellation of the policies is an “extraordinary statutory remedy reserved for insurers who are or may be in a dangerous financial situation without the cancellation of all or part of its fonts.
“After reviewing the information filed in support of this application, and taking into account all of the accompanying facts and circumstances, the Bureau concludes that approval of the early termination plan filed by the Companies is necessary to best protect the interests of its policyholders and the public,” the agreement says.
DeSantis did not provide details on the changes he expects lawmakers to pass in the special session. But he said lawmakers could try to limit litigation over insurance claims, a problem insurers have long blamed for financial losses.
“That causes those bonuses to go up,” DeSantis said. “And so we have to deal with this problem. It is something that is very important. »
Other potential issues could include trying to address the availability and affordability of reinsurance, which is critical backup coverage for insurers. Reinsurance is a key component of policyholder pricing and affects decisions about the amount of cover insurers can write.
The House and Senate were unable to reach an agreement during this year’s regular session on a property insurance bill, with the Senate wanting to go further than the House to strengthen the insurance industry. ‘assurance. House Speaker Chris Sprows, R-Palm Harbor, said more time was needed to see the results of changes to a 2021 insurance law.
DeSantis said Monday that the 2021 law has “good things.”
“But it just didn’t do enough, I think, to really stabilize this situation,” he said. “And so that’s going to be what we’re trying to do, and I think that’s something we have to do.”
Three Florida property insurers — Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co. — have been declared insolvent and in receivership since February.
In addition, the Office of Insurance Regulation will hold three hearings Tuesday on proposals from First Floridian Auto and Home Insurance Co., Kin Interinsurance Network and Florida Farm Bureau General Insurance Co. and Florida Farm Bureau Casualty Insurance Co. that would raise rates owners by more than 20 percent.
Friday’s deal will see 56,500 FedNat Insurance Co. policies canceled and another 83,000 FedNat policies transferred to Monarch National Insurance Co. He also cited a plan to “shrink the operation” from FedNat.
About 8,400 Monarch policies and Maison Insurance Co.’s 3,300 Florida policies will be canceled. In addition, a new investor will invest capital in Monarch, although the details of this investment were not included in the consent order.
It’s unclear where the 68,200 canceled policyholders will find coverage, particularly as they will seek new insurance near the start of hurricane season. With other insurers dropping policies, the state-backed Citizens Property Insurance Corp. had grown to 851,000 policies by the end of April, from 589,000 policies a year earlier.
Citizens, which was set up as an insurer of last resort, has typically recovered 20-25% of policies that were dropped when financially troubled companies went into receivership, said Citizens spokesman Michael Peltier. . At least some of FedNat, Monarch and House policies should end up with citizens.
“It won’t be all of them,” Peltier said. “But it will be a piece.”
In a call last week with analysts, Michael Braun, chief executive of FedNat Holding Co., which includes FedNat Insurance, Monarch and Maison, acknowledged that the market problems were having a far-reaching effect.
“It’s very difficult for the insured, it’s very difficult for the agents, it’s very disturbing. People have a hard time finding cover. Citizens (Property Insurance) is growing exponentially,” Braun said.
BrightWay insurance agent Matt Carlucci II said customers who have been dropped will have 45 days to find new insurance, but notices detailing exactly who is being dropped are unlikely to be released until the end of the month.
“You will receive a letter. You may not hear from us or see us for the next few weeks, but we are aware and we are working on it, so please sit tight,” Carlucci said.
Carlucci explained what these customers should be doing right now.
“What you’re going to do because you’re going to have to get a new policy and nine times out of 10 you need a four point inspection and you need a wind attenuation inspection, and usually you can get both for $100. Do it fast because these detectives are in the same boat. They’re backed by this. It will help your officer get you a new policy very quickly,” he said.
And while FedNat Insurance Co. customers may want to shop around for insurance, Carlucci said they should wait until they know if they’re officially discontinued.
“Because you could be part of that remaining 60 percent,” he said.
And if those clients don’t get a letter in the next two weeks and are worried about being let down, Carlucci said it’s time for them to call their agent.
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