Substantial doubt for future
Yet another property insurance company doing business here in Florida has become insolvent, another has had its ratings downgraded and another will make major changes to steel itself against this uncertain market. Plus another assessment may be on its way to Florida homeowners while agents are faced with returning unearned commissions. It’s all in this week’s Property Insurance News digest.
Lighthouse Property Insurance: The Louisiana Insurance Department has placed Lighthouse Insurance and sister company Lighthouse Excalibur Insurance into receivership. It follows Demotech pulling its Financial Stability Rating from the companies as we reported in the last newsletter. Lighthouse stopped writing in Florida in February but had 27,000 policies at the time of its insolvency. It is the fifth insolvency among Florida writers since mid-2021 and the seventh since 2019 and comes on the heels of St. Johns Property Insurance and Avatar Property & Casualty Insurance six weeks ago. Like St. Johns and potentially Avatar, the Lighthouse insolvency could require an assessment on all Florida homeowners insurance policyholders to pay the company’s outstanding claims after liquidation is completed.
FedNat Insurance: Demotech on April 15 downgraded its Financial Stability Rating from A (Exceptional) to S (Substantial). That prompted the Florida Office of Insurance Regulation (OIR) to require a consent order requiring FedNat and its wholly owned companies to file a plan by the end of this month to improve its rating to the satisfaction of the mortgage market, purchase sufficient reinsurance this season, and raise additional capital to support its Florida and non-Florida business. The company has been working tirelessly to raise capital and restore its Demotech rating. We hope to report a successful outcome in the near future.
United Property & Casualty Insurance (UPC): Last week the company announced it wants to consolidate its four Florida-domiciled companies into three, merging Journey Insurance into American Coastal Insurance and redistributing the capital among that and its other two companies, Family Security Insurance and United Property & Casualty Insurance Company.
Citizens Property Insurance: Meanwhile, the company that many of these displaced homeowners go to find coverage, state-backed Citizens, reports that its policy count is accelerating faster. In March, they were adding 6,000 new policies per week and now it’s 7,000 per week. Total policy count as of April 15: 842,000, with a forecasted 1+ million policies by year’s end. (For our new readers who may wonder why this is bad news, see Citizens Insurance Losing Money.)
Agent Unearned Commissions: The Florida Department of Financial Services has notified insurance agents to expect invoices for unearned commissions resulting from the insolvency and liquidation of Gulfstream Property and Casualty Insurance last summer. About $4.1 million in commissions must be returned by agents to the company’s receiver. Look for more invoices later this year from liquidations of St. Johns, Avatar, and now Lighthouse Insurance companies.
LMA Newsletter of 4-25-22