Owners $168 million tab to identify failed insurance coverage firms

Florida householders could possibly be compelled to choose up the tab on two failed insurance coverage firms.

Insurance coverage regulators may quickly stake $168 million in assessments on Floridians’ property and casualty insurance coverage payments to assist pay for the lack of two insurance coverage firms that collapsed this yr.

The Florida Insurance coverage Warranty Affiliation (FIGA), which picks up property and casualty insurance coverage claims when insurance coverage firms go bancrupt, has requested the Workplace of Insurance coverage Regulation (OIR) to levy a 0.7% evaluation on insurance coverage firms in 2022, which might give FIGA an extra $168 million. That will assist offset a deficit that would develop to $226.4 million by the top of the yr.

If OIR agrees to levy that on firms, policyholders will start in November to see a line on their invoice for 0.7% once they renew or purchase a brand new property or casualty insurance coverage coverage aside from auto insurance coverage.

It might be the primary time since 2012 that OIR has taxed Floridians on to deal with failed insurance coverage firms.

FIGA picked up greater than 1,300 unpaid claims and returned premiums after American Capital Assurance Company, generally often known as AmCap, and Gulfstream Property and Casualty Insurance coverage Firm have been each liquidated this yr. That positioned an extra $415 million burden on FIGA’s part dealing with varied insurance coverage insurance policies, together with householders and personal flood insurance coverage.

Each insurance coverage firms have been liquidated after rankings companies lowered their rankings this yr in persevering with monetary aftermath from Hurricanes Irma and Michael in 2017 and 2018, which nonetheless roil Florida’s property insurance coverage trade at massive.

In a letter despatched two weeks in the past to OIR Commissioner David Altmaier, FIGA Govt Director Thomas Streukens requested OIR approve the 0.7% evaluation, as FIGA’s Board of Administrators agreed.

A Leon County decide declared AmCap bancrupt in April. Gulfstream’s insurance policies have been canceled on Aug. 27, the day after the FIGA board licensed the necessity to elevate charges.

“These two insolvencies materially impacted FIGA’s projected money movement wants and resulted within the want for Board motion,” Streukens wrote.

Lately, FIGA has been in a position to repay deserted claims with out help. However the income from AmCap’s liquidation didn’t come near paying off the claims it left behind.

FIGA’s deficit was already $142.7 million earlier than FIGA took over Gulfstream’s claims, resulting in the $226.4 million end-of-year projection.

One other devastating storm may take down extra firms, exacerbating FIGA’s state of affairs.

In the course of the affiliation’s Aug. 26 board assembly, staffers relayed that the company could be out of money by the top of subsequent summer time.

If OIR certifies the evaluation, it might be the primary time since 2012, when it levied a 0.9% evaluation, that OIR has charged an identical price on insurance coverage firms. Earlier than that, it was in 2009, after the 2008 recession, when it charged a 0.8% price.

OIR doesn’t must levy the evaluation. Gov. Ron DeSantis and the Cupboard, which incorporates Chief Monetary Officer Jimmy Patronis, may doubtlessly inform Altmaier to carry off on the evaluation throughout the Cupboard assembly scheduled for later this month, having OIR work as an alternative with the Legislature to patch the finances hole.

After robust hurricane seasons in 2004 and 2005, the Legislature lent windstorm and property insurers and the nonprofit Residents Property Insurance coverage Corp. a hand. Nevertheless, the FIGA board final month rejected searching for a legislative bailout.

Furthermore, the evaluation is just not on the agenda for the upcoming Cupboard assembly. In a press release to Florida Politics, Patronis bolstered his dedication to preserving Floridians’ insurance coverage charges down.

“The CFO is dedicated to persevering with his efforts to battle charge hikes by way of his ongoing legislative priorities together with defending customers and preventing fraud, which impacts each Floridian’s charges,” Patronis spokesperson Devin Galetta stated.

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