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Florida agency downgrades 4 property insurance companies' ratings

In Florida, companies with an "A" rating show financial stability.

TAMPA, Fla. — The Florida rating firm Demotech confirmed four insurance companies were downgraded.

Demotech told 10 Tampa Bay these four companies were downgraded:

  • Florida Family Insurance Company - Aʹ (A Prime) to A
  • Florida Family Home Insurance Company - Aʹ (A Prime) to A
  • Ocean Harbor Casualty Insurance Company - Aʹ (A Prime) to A
  • United Property & Casualty Insurance Company – A to M ("M" meaning moderate)

In Florida, companies with an "A" rating show financial stability.

Demotech lists Weston Property Insurance and FedNat as not rated.

An insurance expert who works for the Insurance Information Institute, Mark Friedlander, said in most cases, no rating means the company could be going into liquidation. 

So, what does a not-rated company mean for a policyholder? It's problematic for Floridians because a home insurance company needs an "A" rating to be compliant with federal mortgage loans. 

In most cases, people will need to find a new company to insure them. 

"You are now in disagreement of your mortgage agreement, so you have to move your coverage to another company that’s 'A' rated," Friedlander said.

In Florida, Friedlander said there are about 50 homeowner insurance companies. 

When companies are downgraded and you need to find a new one, others already have too many customers. That leaves people scrambling to find insurance. 

Friedlander said people should prepare and talk with agents ahead of time, especially during hurricane season and having insurance is so vital in case a storm hits.

People in Florida are already paying more money for insurance compared to other states, according to officials. The Insurance Information Institute estimated Floridians are paying three times as much as the average in other states at an average of $4,231 a year. The U.S. annual average is $1,544. 

What do you do if your insurance company is downgraded? If you can't find another company, people can turn to the state-regulated and operated option called Citizens Property Insurance Corporation, however, experts said this should be used as a last resort. 

Friedlander said Citizens currently has $6.7 billion in reserves, and $11.3 billion in claims paying ability. 

Since it is state regulated, Friedlander also said Citizens can't charge as much as a private insurance company. While that sounds great, if a storm were to hit and money is needed, the company could charge policyholders a surcharge. 

Yet, another problem for Floridians with that option is, Friedlander said, Citizens has about one million customers. Factoring in new customers from downgraded insurance companies, that's a lot of people for one company to handle.  

There are other programs in place to help if needed. 

"The Florida Hurricane Catastrophe Fund kicks in if a company is unable to pay all its claims from a hurricane loss event," Friedlander said. "There's also the Florida Insurance Guarantee Association which pays claims for insolvent insurers." 

If your company was downgraded, experts say contact your local insurance agent to help navigate your next steps. 


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