BlogMonday, June 01 2020
Here are the top five things policyholders need to understand about insurance and hurricanes:
Thursday, May 28 2020
As we all deal with challenging demands of the coronavirus, the June 1 start of hurricane season is coming and it’s important to get prepared. Because of COVID-19, getting prepared will look a little different than in other years. With that thinking in mind, the Florida Gulf Coast to Heartland Chapter of the American Red Cross has tips to help you. Make a plan If authorities advise you to evacuate, be prepared to leave immediately with your evacuation kit (see below). ¦ Plan now if you need help leaving or if you need to share transportation. ¦ Ask friends or relatives outside your area if you are able to stay with them. Check and see if they have symptoms of COVID-19 or have people in their home at higher risk for serious illness. If they have symptoms or people at higher risk in their home, make other arrangements. Check with hotels, motels and campgrounds to see if they are open. Find out if your local emergency management agency has adapted its sheltering plans. ¦ Check with the Centers for Disease Control and update emergency plans due to coronavirus. ¦ Plan ahead for your pets. Keep a phone list of pet-friendly hotels/motels and animal shelters that are along your evacuation routes. Remember, if it’s not safe for you to stay home, it’s not safe for your pets either. Build a kit Assemble two kits of emergency supplies and a one-month supply of prescription medication. Some supplies may be hard to get, and availability will worsen in a disaster, so start gathering supplies now. Start with this basic supply list: ¦ Stay-at-home kit: Include everything you need to stay at home for at least two weeks with items such as food, water, household cleaning and disinfectant supplies, soap, paper products and personal hygiene items. ¦ Evacuation kit: Your second kit should be a lightweight, smaller version that you can take with you if you must leave your home quickly. Include everything you need to be on your own for three days: ¦ Food and water ¦ Personal hygiene items ¦ Cleaning and disinfectant supplies that you can use on the go (tissues, hand sanitizer with 60% alcohol and disinfecting wipes) ¦ Cloth face coverings for everyone in your household who can wear one safely. Cloth face coverings are not a substitute for physical distancing. Continue to keep about 6 feet between yourself and others in public. Cloth face coverings should not be placed on young children under age 2, anyone who has trouble breathing or is unable to remove it without help. ¦ Infant formula, bottles, diapers, wipes and diaper rash cream ¦ Pet food and extra water for your pet ¦ Cash or traveler’s checks ¦ Important family documents such as copies of insurance policies, identification and bank account records saved electronically or in a waterproof, portable container ¦ 1-month supply of prescription medication, as well as over-the-counter medications such as cough suppressants and fever reducing drugs and medical supplies or equipment. Keep these items together in a separate container so you can take them with you if you have to evacuate. Be informed ¦ Have access to weather alerts and community notifications. Be sure that you can receive official notifications even during a power outage. Follow directions of state and local authorities. ¦ Use the Red Cross interactive map to identify likely disasters in your area. ¦ Learn about your community’s response plan for each disaster and determine if these plans have been adapted because of COVID-19. ¦ Find contact information for state, local and tribal governments and agencies, and for state emergency management agencies. ¦ Because of COVID-19, stay current on advice and restrictions from your state and local public health authorities as it may affect your actions and available resources and facilities. Take a first aid and CPR/course online to learn what to do in case emergency help is delayed. Download the Red Cross Emergency App for instant access to weather alerts for your area and where loved ones live. Visit www.redcross.org/hurricane for full information about what to do before, during and after a hurricane. ¦ Tuesday, May 19 2020
At least seven homes were lost in a brush fire in southwest Florida, and many of the victims say they escaped with nothing more than the clothes on their backs. The 8,663-acre wildfire fire in Collier County continued to burn over the weekend and was around 40 percent contained as of Sunday. The Florida Forest Service said in a release Sunday morning that 146 firefighters were working to contain the fire. Greater Naples Fire Chief Kingman Schuldt confirmed earlier that seven residences were lost in the blaze. The Naples Daily News spoke with residents Saturday and found several displaced community members, suggesting the official number of homes lost will rise. One man thought he’d lost his father to the blaze. Michael Christensen drove through the fire Wednesday only to find his dad’s trailer engulfed in flames. Neighbors told Christensen that his dad, also named Mike Christensen, was refusing to leave his home for more than 40 years. “I couldn’t see anything,” he said. “All I could see was flames. Like dad, dad, where are you dad?” What Christensen didn’t know at the time was that another neighbor had already grabbed his dad and hauled him to safety, “kicking and screaming,” Michael Christensen’s wife, Patty, said.
“I lost everything,” he said, but added, “I ain’t leaving.” Thursday, May 07 2020
As Florida slowly reopens, officials are now contemplating what they should do if the coronavirus outbreak lingers into hurricane season, Republican Gov. Ron DeSantis said Tuesday. Hurricane season begins June 1 and usually peaks from late August through September. Florida is often a target for storms, forcing thousands of people to evacuate with many fleeing to shelters. “We don’t know how the virus is going to react as we move into these various stages. We don’t know what it’s going to look like a month from now, three months from now, but we have to assume that it’s going to be with is in some capacity, so how do you deal with hurricane issues?” DeSantis said at a news conference in Sarasota. Florida has had more than 37,000 confirmed coronavirus cases resulting in nearly 1,500 deaths. DeSantis partially lifted his “safer at home” order Monday, allowing restaurants and retail shops to begin operating at 25% capacity. “This virus really thrives and transmits when you have close sustained contact with people inside an enclosed environment,” DeSantis said. “As you’re looking at sheltering for a hurricane, you have to keep that in mind. If you pile people into a place, under normal circumstances that may be fine, but that would potentially allow the virus to really spread if somebody is in fact infected.” Florida emergency management Director Jared Moskowitz is working with the Federal Emergency Management Agency on potential changes to how the state handles evacuations and sheltering. Moskowitz said that might include shelters that only accept people infected with the virus, or orders for people to shelter in place depending on the strength of the building and the power of the storm. “We’re going to do more non-congregate sheltering instead of mass congregate sheltering,” he said. Moskowitz also said the state will stockpile personal protective equipment in preparation for the storm season, including 10 million masks. Among other topics DeSantis focused on were:
Monday, May 04 2020
Florida’s restaurants and retail stores will be allowed to reopen Monday at 25% capacity, if the local government allows it, Gov. Ron DeSantis announced Wednesday, as the state begins the slow climb from the economic abyss caused by the coronavirus. The governor specifically excluded hard-hit, heavily populated Miami-Dade, Broward and Palm Beach counties, saying their businesses will begin phase one when it is safer. His order will also allow hospitals and surgical centers statewide to restart nonessential, elective procedures – but only if they have sufficient medical supplies and agree to help nursing homes and assisted living facilities prevent and respond to coronavirus outbreaks. Parks, golf courses and other outdoor recreation areas already began reopening in some counties Wednesday. “I am convinced we can take this step. We will be smart, we will be safe and we will do it step-by-step, but we should have hope,” DeSantis said. “We are resourceful, we are innovative, we can get this done. It is not going to happen overnight. If there was some magic where I could flip the switch, I would do it.” DeSantis, a Republican, is being more cautious than the neighboring state of Georgia, as well as the task force DeSantis formed last week to study how to get people back to work. The task force suggested restaurants could operate at 50% capacity, but the governor is easing in more slowly – 25% capacity inside, tables 6-feet apart outdoors. He said earlier this week that Florida will take “baby steps” in trying to resume business and is following through with that approach. The task force also suggested reopening gyms and barbershops with restrictions, but he’s not allowing that in the first phase. DeSantis is also not setting a date for the second phase. Instead, he’s taking a wait-and-see approach to how the state fares during the first phase. “My hope is that we are thinking about each phase as weeks, not thinking about months,” DeSantis said. “We are making progress. We need to put people back to work in a safe, smart and step-by-step way, but it is going to be data driven.” Bars and nightclubs also won’t reopen yet, but DeSantis gave approval to sporting events if they don’t include spectators. The state will continue to restrict visitors to nursing homes and state prisons.
More than 800,000 Floridians have filed for unemployment as the state’s two biggest economic sectors, tourism and agriculture, have been decimated after visitors fled and institutional produce buyers such as hotels and schools closed. Still, many Floridians did not seem eager Wednesday to resume even partial normalcy. Retired Jacksonville teacher Pamela Riggs-Stoia said reopening anything without more testing for the disease and contact-tracing is foolish. “I feel like we are treating people as disposable. Remember that not only are the participants in the newly opened places susceptible to infection, but the resulting secondary infections to family, roommates, etc, and most importantly exposing our medical providers to more and more viral load,” said Riggs-Stoia, 60. Sherif Andretta, a 35-year-old Miami music producer, said he welcomes the opening of parks and outdoor spaces especially since his dog misses her walks. But he is hesitant to go to a restaurant or anywhere that draws people into tight quarters. “Living in Miami, we are the most dense part of the state, and have to be more cautious than other cities,” Andretta said. “I will continue to practice social distancing, and will avoid restaurants and other nonessential businesses until I believe it is safe.” Zeytin Turkish Cuisine in Orlando will remain closed to sit-down dining for up to another month for safety reasons. Co-owner Michele Bourassa said that since the lockdown the mom-and-pop restaurant has only been serving takeout and earning about half its normal revenue. Any economic benefits to reopening don’t outweigh the risks, she said. Even if the restaurant were to reopen, with a requirement for only 25% capacity, “a restaurant isn’t going to make any money.” “We don’t feel like it’s safe to open,” Bourassa said. “We don’t want someone coming in here who is sick.” DeSantis was one of the last governors to issue a statewide stay-at-home order, preferring a county-by-county approach throughout March. Statewide, he essentially closed bars March 17 and on March 20 he closed gyms, limited restaurants to takeout and delivery and banned gatherings greater than 10. Schools also closed in March. On April 1, the governor ordered the closure of nonessential businesses statewide starting two days later and ordered employees to work from home wherever possible. Monday, March 30 2020
Demotech has affirmed 37 of the 46 Florida-based companies rated by the actuarial firm, as of March 26, according to information gathered from Demotech’s website. That leaves fewer than 10 Florida insurers that are still awaiting a decision on their financial stability ratings (FSR) from the Ohio-based ratings agency. Demotech said it is continuing to review both public and proprietary financial information and have discussions about business plans with the yet-to-be-affirmed insurers. In mid-March, Demotech affirmed a slew of companies (see chart) and this week affirmed several others, including Capitol Preferred Insurance Co., Gulfstream P&C Insurance Co., and Security First Insurance Co. The companies that are still in discussions and will either be affirmed or downgraded, as of March 26, include: Avatar Property & Casualty Insurance Co., Centauri Specialty Insurance Co., Cypress Property & Casualty, Omega Insurance Co., Safepoint Insurance Co., Tower Hill Select Insurance Co., and Tower Hill Signature Insurance Co. The Florida Office of Insurance Regulation approved Tower Hill Select and Omega merging into Tower Hill Signature on March 25. Demotech Actions “Demotech has downgraded a number of carriers. Another subset of the carriers that we review and rate have opted to be purchased so that investors can exit the Florida residential property insurance marketplace. A larger number have been affirmed based upon (or in spite of?) their year-end operating results. Another group continues to dialogue with us and share their thoughts on the marketplace, how their business model must adapt, etc.,” Demotech President and Founder Joseph Petrelli said in a statement to Insurance Journal on March 25. Companies that have not had their ratings affirmed as of press time are not necessarily being downgraded, and delays in ratings affirmations should not be misconstrued, according to Demotech. Many companies have avoided ratings downgrades by being acquired (see chart), or injecting significant capital into their books, while others have been able to sustain their rating by providing Demotech proprietary or confidential information that is not in the public domain, the company said. Florida Insurers Financial Stability Rating (FSR)
A” = Unsurpassed A’= Unsurpassed; A= Exceptional; S = Substantial; M = Moderate In comments on its March 23 affirmation of Gulfstream P&C, Demotech Vice President Sharon M. Romano Petrelli said a delay in a rating affirmation should “not be made into something bigger than it is.” Gulfstream’s company business model kept them at the A level, despite increases in reinsurance costs anticipated in 2020 and litigation trends in the state. “The management team at Gulfstream has met or exceeded our financial metrics for the past several years,” she said. Joseph Petrelli added that while Demotech reviews public information on all the carriers it reviews and rates, it also reviews holding company and affiliated entity financials when necessary. “Gulfstream invited us to do so to better understand how they had positioned themselves to address the myriad issues facing the residential property insurance markets in Florida,” Petrelli said. “Given the breadth and scope of their capability to honor their commitment to policyholders, we needed additional time to digest their additional information.” For Security First, which was affirmed on March 24, Petrelli said succession planning, managing claim litigation in a difficult judicial environment, and astute reinsurance purchasing are “three facets of the company’s enterprise risk management program that support” sustaining an FSR at the A level, “despite the projected increases in reinsurance costs anticipated in the near future.” Demotech did not release a statement on the ratings affirmation of Capitol Preferred, which has a 36.5% rate increase request still under consideration by the Florida Office of Insurance Regulation. The company’s CEO told regulators at a rate hearing in February that the company needed the increase because of reinsurance costs, assignment of benefits (AOB) abuse and first party lawsuits. January Warning These long-awaited ratings announcements follow Demotech’s warning in January that it may downgrade as many as 18 of the 46 Florida domestic insurers it rates. In a letter to Florida’s Citizens Property Insurance President and CEO Barry Gilway that was obtained by Insurance Journal, Petrelli outlined several factors in the state that were placing insurer ratings in jeopardy, including abuse of assignment of benefits agreements and first party litigation. “The economics of the marketplace over the past several years have made it impossible for Demotech to sustain each of the Florida focused carriers that we review each quarter at a [FSR] of A, Exceptional,” he said. Petrelli said that after Demotech reviewed the third quarter 2019 financials of carriers, it requested year-end projections of operating results for nearly half of the 40-plus carriers it reviews and rates. “Having provided these carriers with ample time to implement revised business models, secure capital infusions, implement rate revisions, re-underwrite established books of business and utilize other enterprise risk management activities, it is apparent that few have returned to profitability,” Petrelli wrote. Since then, several Florida companies have made moves. Anchor P&C ceased its operations and sold its policies to Homeowners Choice Insurance. Prepared Insurance was acquired by Lighthouse Property Insurance Corp. This week, the state approved the merger of the two Tower Hill companies. Demotech would not disclose the names of the insurers it is still reviewing, but Petrelli said he expects it will announce several downgrades at the end of March. Petrelli told Insurance Journal this week that Demotech is in the process of having “thoughtful and focused” discussions with the management of the insurers not yet affirmed. “If we are convinced that their action has addressed previous matters brought to their attention, and will facilitate their operational effectiveness in the ever-changing circumstances of the most difficult operating environment in the US, and provide them with the opportunity to make a reasonable profit, we sustain the Financial Stability Rating,” he said. He also noted that some downgrades from ‘A’ FSR (Exceptional) to S (Substantial) are as much a reflection on the operating environment in Florida as they are on a carrier. “It is the marketplace more than carrier-specific metrics that is driving the need for downgrades. If these carriers were focused on any other jurisdiction, they would be sitting in the driver’s seat,” he said. Petrelli added that carriers that have sustained their ratings to date have shown Demotech “how they intend to fulfill their commitment to Floridians through their business model.” Friday, March 27 2020
President Donald Trump declared Florida a disaster area Wednesday because of the new coronavirus outbreak, while another of the state’s largest metropolitan areas moved toward a near-shutdown. The president acted a day after Gov. Ron DeSantis requested the declaration, becoming the sixth state to receive one because of the virus. The move makes the state eligible for federal funding for emergency protective measures and crisis counseling. The declaration came shortly after the two major counties in the Tampa Bay area, Hillsborough and Pinellas, moved to impose lockdown orders. Gov. Ron DeSantis has refused to impose a statewide lockdown like California, New York, Illinois and other states have done, saying the mostly smaller counties that have no or few confirmed cases should not have the same restrictions that the metropolitan areas are imposing. State Democrats have called on the Republican governor to impose a statewide lockdown, but he said again that he doesn’t believe that all areas in such a large state need the same approach. “There are parts of the state where you have more sporadic cases and to order someone to not earn a paycheck when them going to work is not having any effect on what we are doing with the virus, that is something that I think is inappropriate,” DeSantis said. As DeSantis left a meeting with reporters in his office Wednesday, the governor noted that his pregnant wife and their two children felt ill in January, so he is now wondering if they had COVID-19. He said only when a test is available to see who had the disease with no or few symptoms will the nation know exactly how contagious and deadly it is. DeSantis has ordered some statewide measures such as closing bars and gyms, and limited restaurants to takeout and delivery. State parks have been closed. Anyone arriving from New York, New Jersey or Connecticut or anyone who returned from there within the last three weeks must self-quarantine under threat of 60 days in jail, DeSantis has said. The state issued recommendations Wednesday that people 65 and older or with health issues confine themselves to their home. The state is approaching 1,700 confirmed cases and at least 21 have died. In Pinellas County, home to St. Petersburg, commissioners on Wednesday ordered their nearly 1 million residents to stay at home except for essential activity like trips for groceries and medical needs. The directive takes effect at noon Thursday. It allows non-essential businesses to remain open as long as they follow Centers for Disease Control social distancing guidance of 6-foot (2-meter) separation. Parks and boat ramps will remain open. Residents are permitted to exercise outdoors if they keep the proper distance apart and gather in groups of 10 or less. The county has had 50 confirmed cases and one death, according to the state. Officials in Hillsborough County, home to Tampa, will meet by telephone Thursday to hammer out the final language on an order that would restrict residents to their homes from 10 p.m. to 5 a.m. on weekdays and 24 hours a day on weekends, with exceptions to get food, groceries, medicine and other essentials. Businesses deemed essential could stay open, provided that a 6-foot (2-meter) distance was maintained during any interaction with customers. Residents would also be allowed to do recreational activities outside. The county has had 106 cases and no deaths. Counties and cities throughout the state, especially in the major metropolitan areas of south and central Florida, have imposed restrictions on their residents and businesses. The highway into the Florida Keys has been closed to non-residents. Stay-at-home orders for Orange and Osceola counties in the Orlando area go into effect Thursday night. Smaller, more rural counties have generally stuck with the restrictions DeSantis imposed statewide. The state did get some good news Wednesday when the Florida Senate released a report showing sales tax revenues before the coronavirus hit were higher than expected. Collections were nearly $49 million above estimates, and the state had seen an overall $141 million gain in revenue through February compared to the same period last year. The Legislature last week sent DeSantis a $93 billion state budget that many lawmakers believe will have to be adjusted as tax revenues will plummet with the closure of the state’s theme parks, beaches and other attractions. The state does have $4 billion in reserves. For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia and death. The vast majority of people recover. Thursday, October 10 2019
Since Hurricane Michael made landfall Oct. 10, 2018, federal assistance for recovery in the 18 affected counties is nearly $1.9 billion, including FEMA grants, National Flood Insurance Program payments and U.S. Small Business Administration loans, according to a statement from FEMA. Included in that figure is an estimated $224.1 million in claims paid to 4,270 NFIP policyholders, FEMA said. One year has elapsed since Hurricane Michael pummeled the Florida Panhandle, packing 155 mph winds, torrential rain and high tides and displacing thousands of families amid structural damage that will cost billions to repair. Twenty-five federal and 29 state agencies responded to one of the country’s most powerful storms. In addition to state and federal agencies, the local governments, community leaders, voluntary and faith-based organizations and private sector partners contributed to hurricane recovery efforts. FEMA said federal assistance for Hurricane Michael, as of Sept. 30, 2019, includes:
In addition, FEMA’s Interagency Recovery Coordination Group continues to work with the state and the designated counties and their communities to help identify and coordinate financial and other resources to meet needs beyond what FEMA, the state and other programs can cover. 
Seven long-term recovery groups have been formed across the Panhandle to address unmet needs of survivors in their communities. “As the costs of disasters continue to rise, governments and residents must find ways to reduce hazard risks to our communities,” FEMA said in a statement. Under the presidential declaration for Hurricane Michael, all areas within the State of Florida are eligible for assistance under the Hazard Mitigation Grant Program (HMGP). HMGP funding helps communities eliminate or reduce future disaster-related damage. In general, individuals may not apply directly to FEMA for HMGP funding, but may be sponsored through a local government, tribe or private nonprofit. All applications from local governments or others are submitted to the state, which receives and distributes HMGP funds from FEMA. Tuesday, October 08 2019
Florida personal lines insurer Florida Specialty Insurance Co. (FSIC) has been ordered into receivership and will be liquidated after state regulators determined the company is insolvent and unable to establish a viable business plan moving forward. The Florida Department of Financial Services has been appointed as the receiver and the insurer’s more than 90,000 policyholders have been notified to find a new insurance company immediately. DFS has also alerted agents to assist their policyholders with finding new coverage. The move comes after regulators say they have spent more than a year helping the company develop a plan to continue, and just over a month after ratings agency Demotech downgraded its Financial Stability Rating (FSR) of the company from A (Exceptional) to M (Moderate). The Florida Office of Insurance Regulation alerted DFS that grounds existed for the initiation of delinquency proceedings by DFS’ Division of Rehabilitation and Liquidation on Sept. 27, and the order was executed on Oct. 2 by the Second Judicial Court in Leon County. OIR said in an email to Insurance Journal the company has about 90,000 policies in force in Florida, with the majority of those (40,000) being homeowners and 28,000 being mobile home policies. The company also wrote dwelling fire, HO-6, and wind only policies. All of the company’s policies will terminate on Nov. 1, 2019. OIR placed Florida Specialty under administrative supervision in March of this year and said it has attempted to help Florida Specialty for over a year to develop a viable business plan. “When it became clear that Florida Specialty was unable to develop such a plan, OIR worked with the Department of Financial Services, Citizens Property Insurance Corporation, and FIGA [Florida Insurance Guaranty Association] provide Florida Specialty policyholders with a path for coverage options in the private market or guaranteed coverage with Citizens if private market coverage could not be secured,” said Florida Insurance Commissioner David Altmaier in a statement to Insurance Journal. “Our goal has been to protect consumers, who are especially vulnerable during hurricane season, and to encourage consumers to seek coverage in the private sector. While we never want to see an insurer go into receivership, the good news is that we have a safety net in place to protect consumers.” OIR detailed four bases for Florida Specialty to be entered into receivership in an affidavit from Virginia Christy, OIR’s director of the Property & Casualty Oversight business unit, including:
OIR contends in the affidavit that Florida Specialty is operating under the $10 million surplus required by Florida Insurance Code due to tax liabilities that it will not be able to meet because of its lack of positive income and non-recoverable reinsurance amounts. OIR also states Florida Specialty saw a “sudden and significant” decrease in surplus and profitability of $14.5 million in policyholder surplus as of the second quarter of 2019 – a 59.1% decrease compared with the second quarter of 2018. OIR noted Florida Specialty experienced an adverse loss reserve development pattern between 2017 and 2018 and has been “consistently underestimating its actual losses and failing to establish adequate reserves for those losses.” In addition, OIR said Florida Specialty violated the terms of the administrative supervision order it entered into with the regulator in March for the purposes of “protecting its assets and the interests of its insureds,” according to OIR. In July, the order was extended through Nov. 15. OIR said that Florida Specialty was to obtain prior written consent from the office before conducting certain activities as part of the supervision order that it agreed to. However, in April, Florida Specialty announced it would non-renew a portion of its HO3 portfolio without prior approval from OIR. OIR stated it worked with Florida Specialty during the administrative supervision to “review and evaluate multiple proposals, acquisition offers, renewal rights agreements, and other agreements that would facilitate a transfer of its policyholders to reliable insurers. No proposal submitted has proved to be viable.” In an e-mail to Insurance Journal, OIR said that over the last year Florida Specialty was required to file a corrective action plan that included a solution for the ongoing operation of the company including a sale, merger, change of business plan or other measures to address its “hazardous financial condition.” It also requested information regarding its reinsurance program to demonstrate that Florida Specialty had sufficient catastrophe insurance to provide for the upcoming hurricane season, requested a schedule of outstanding claims and renewals, and placed a limit on its expenditures. Multiple requests for comment emailed to company officials were not returned. History of IssuesDemotech noted Florida Specialty’s financial troubles in early 2018 in a Florida insurer ratings update that indicated more than a dozen Florida domestic insurers could face potential rating actions due to a combination of 2017 catastrophe losses and assignment of benefits litigation, as well as judiciary changes in the state that could impact insurers. All of the insurers were later affirmed except Florida Specialty, which Demotech affirmed shortly after the firm developed and planned to implement a business plan that Demotech said at the time met its criteria. That business plan included a loss portfolio transfer of the company’s net losses to Sirius America Insurance Co., as well as reinsuring the balance of its net premium effective Feb. 28, 2018, also with Sirius America. That plan was pending OIR approval. On Aug. 2 of this year, Demotech again affirmed Florida Specialty’s “A” FSR based on the company’s measures undertaken to revise its business model. However, on Aug. 16 Demotech issued a ratings downgrade, saying in a statement on the downgrade that the action was “necessary despite potential transactions being pursued by the company.” Demotech President Joe Petrelli said in an email to Insurance Journal that the transaction that was referenced in the 2018’s ratings update and the transaction mentioned in its August press release are “separate and distinct.” In the ratings downgrade announcement in August 2019, Demotech said that Florida Specialty reported surplus in excess of the $10 million statutory minimum as required by Florida Insurance Code, but that the company noted in its most recent financial statement it had “substantial doubt” in its ability to continue operating “given the current environment in the state of Florida and none of the transactions under consideration have been executed.” “The company, albeit above the state minimum as to surplus, does not meet the financial metrics associate with an FSR of A,” Petrelli noted. Despite Florida Specialty’s issues, Petrelli maintained that Florida Specialty “has plenty of cash and was well positioned for a voluntary runoff.” Petrelli told Insurance Journal that while the liquidation should work for consumers, he is concerned about the cancellation of the company’s reinsurance. What’s NextThe focus for regulators has now turned to ensuring Florida Specialty’s 90,000-plus policyholders find a new insurer and any outstanding claims are settled. DFS began notifying policyholders and agents of the Florida Specialty liquidation last week and has provided information on its website on how to obtain new coverage and handle open claims. In an October 2 email to agents, DFS said the liquidation order legally imposes certain obligations on agents and they are expected to contact policyholder clients and assist them with any questions regarding the receivership proceeding. “As an agent for FSIC … you are required to provide a written notice of the receivership, by registered or certified mail, or by email with delivery receipt required, to the last known address of policyholders whose policy has not been replaced or reinsured with a solvent authorized insurer,” the letter states. Agents are advised to first look for coverage in the private market for any Florida Specialty policyholders and if that is not available, coverage can be placed with Citizens Property Insurance Corp. Consumers must have an agent in order to access coverage through Citizens. Spokesperson for Citizens Michael Peltier told Insurance Journal that Citizens will assist consumers in finding an agent if they do not have one. “Part of Citizens’ statutory mission is to protect Florida homeowners when they need it most,” said Barry Gilway, Citizens president/CEO and executive director. “Having 90,000 homeowners unexpectedly lose coverage in the middle of an already active hurricane season meets that criteria. We are working with the Department of Financial Services and Office of Insurance Regulation to provide an expedited process for Florida Specialty policyholders who need coverage to obtain an offer from Citizens.” Gilway added that going forward, Citizens will continue to work with the private market through Citizens depopulation program and the Property Insurance Clearinghouse to find comparable private options for policyholders and maintain Citizens’ role as Florida’s residual insurer of last resort. Citizens will begin reaching out to policyholders this week and has set up a website for information. The Florida Insurance Guaranty Association [FIGA] will be responsible for any payment of covered claims occurring prior to the finding of insolvency and will provide coverage for policyholders for the 30-day period between the order of insolvency and the cancellation of the coverage (Nov. 1). FIGA will also return unearned premium to Citizens or policyholders. OIR said Florida Specialty currently has 60 open Hurricane Michael claims. The Florida Association of Insurance Agents (FAIA) is also working with its agents to assist them with obtaining coverage for their insureds. FAIA President and CEO Jeff Grady said the association is thankful that Citizens has created a safety net for the more than 90,000 policyholders now needing a new insurer. “Not only has Citizens created an expedited process for obtaining coverage, but they have also worked out an arrangement with FIGA for the easy transfer of any returned premium that is due,” Grady said. “Finally, Citizens has also created a relatively easy appointment process for agents that are not currently appointed with the company. Most Florida Specialty policyholders will likely experience an increase in their annual premium, whether they are able to find coverage in the private market or from Citizens.” Sunday, September 08 2019
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