What is the plan to solve the Florida property insurance crisis? – Insurance Newsnet

You’d think state leaders would choose their words more carefully when addressing the only property insurance rating agency in the midst of our insurance crisis and a full-blown housing market downturn. the name Calling won’t win friends or impress people, create much less affordable insurance options.

Last month, the Demotech, Inc.one ohio-based financial rating firm, has announced that it will downgrade 17 private insurance companies in operation Florida. The move prompted a sharp backlash from state leaders, including counterproductive complaints at federal home mortgage agencies. of Florida The only property insurance rating agency.

In his letter to Fannie Mae, Freddie Macand Federal Housing Finance Agency, Florida Chief Financial Officer Jimmy Patronuswas called Demotech, Inc. “A rouge rating agency,” playing “wreak havoc on the financial lives of millions of Floridians.” This, from a guy who seems more interested in knocking President Biden and IRS Rather than seeking solutions to a crisis that threatens the state’s housing market and the larger economy.

Carping against Demotech may have bought the state time. The rating agency postponed its initially planned downgrades but angered by the state’s CFO is not a realistic alternative to a comprehensive policy to keep property insurance viable and affordable.

For subscribers: Property insurance market in ‘highly uncertain position’ as hurricane season approaches

In 2019, Floridians paid $1,988, the average home owner insurance premium. Today, it is $4,231According to one Insurance Information Institute Analysis. Property and casualty companies that still offer homeowners insurance continue to face liquidity threats. As a result, Citizens Property Insurance CorporationState government backed insurance companies of “last resort” are fast becoming the only viable option.

“When the market is healthy, citizens are small as private companies take advantage of good market conditions.” Michael PeltierA Citizen spokesman told a Post reporter Hannah Morse. “When the market is in challenging times, we grow.”

As the state faces the high point of another hurricane season, the stakes couldn’t be much higher. Homeowners who rely on federally-backed mortgages need highly-rated insurers to meet them Fannie Mae and Freddie Mac Insurance requirements. Lower ratings typically force policyholders to pay more for new coverage, especially for homeowners whose home is paid for with a federally-backed mortgage.

Government Ron DeSantis Convenes special session to address property insurance crisis

given, Gov. DeSantis called a special session Florida Legislature To address the crisis. The result was more money set aside for reinsurance to help struggling insurers, a move that was strengthened this month when Florida Office of Insurance Regulation has announced plans to establish a temporary reinsurance arrangement through Citizens Property Insurance CorporationTo brace insurers for current hurricane season.

The provision implements an “exception” that allows struggling insurers to receive reinsurance, money that allows them to provide coverage and meet requirements on federally-backed securities. Unfortunately, exceptions won’t help much if Demotek is forced to further downgrade or quit. Florida completely

Worse, state efforts to address the crisis have not mollified the insurance industry, which still sees climate change and ongoing litigation as factors. Florida Risky place to do business. The special session, which produced bills that favor the insurance industry and consumers, was met with a collective “meh” by the industry.

For subscribers: Will recent legislation on property insurance be enough to help? of Florida Homeowners?

It’s not like the state didn’t see this coming. Large insurance firms that offer bundled home and auto insurance policies in other states have abandoned them Florida Years ago, that left homeowners with smaller firms that might be willing to take the risk but needed more help getting reinsurance from the state. Florida To do so.

“I really think the only way to address property insurance is national disaster insurance like the federal government did with the flood,” state Sen. Lori Bermand-Delray Beach told the Post editorial board. “I hope the reinsurance Band-Aid works but I’m not convinced.”

Whether the solution will be market-driven or government-driven remains to be seen. But so far the only plan seems to be hoping that the storm doesn’t come.

If state leaders, like Patronis, are serious about addressing property insurance, they will take a more proactive approach with the industry and appropriate federal agencies. It is clear that only reacting to events does not work. Whining about the last standing rating agency doesn’t help either.

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