Less than a week from the start of hurricane season, an estimated 53,205 homeowners insurance policyholders in Florida will have their policies cancelled or nonrenewed after approval by the Florida Office of Financial Regulation.
The Florida regulator approved Office of Insurance Regulation consent orders for three Florida-based insurance companies: Universal Insurance Co. of North America (UICNA), Southern Fidelity Insurance Co., and Gulfstream Property and Casualty.
Inside the consent orders, UICNA is approved to drop 13,294 personal residential policies, Southern Fidelity is approved to drop 19,600 policies, and Gulfstream is approved to drop 20,311 policies. Policyholders with UICNA and Gulfstream will have their policies cancelled within 45 days after receiving notice, while Southern Fidelity will drop policies over the next 14 months.
In 2020, Florida’s insurance industry combined for $1.7 billion in lost revenue. According to the Insurance Journal, the deteriorating financial condition of Florida’s domestic companies is blamed on several factors: excessive litigation, contractor schemes, several years in a row of major catastrophes and the increasing cost of reinsurance.
Section 624.408, Florida Statutes, requires insurance companies to have a surplus that is at or above $10 million. The financial losses recorded by UICNA, Southern Fidelity, and Gulfstream, determined that the three companies would have fell below the required surplus and that the cancellation of policies are “necessary to protect the best interests of the public or policyholders,” as stated in the OIR orders. The orders note that included in the Florida Statutes is “an extraordinary statutory remedy reserved to address insurers which are or may be in hazardous financial condition.”
Along with the policy cancellations, Floridians can also expect to pay a higher insurance rate for policies with less coverage in an attempt by the insurance companies to offset the financial loss that they have suffered the last several years.
Although it’s good news for the insurance companies involved, it may become disastrous for Floridians who are forced to find new homeowners insurance amid a hurricane season that projects 17 hurricanes, four of which that are projected to be “catastrophic,” according to scientists at Colorado State University.
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Casey Owens is a writer at The Florida Capital Star. Follow him on Twitter at @cowensreports. Email tips to [email protected].
