TALLAHASSEE — State regulators Friday asked a judge to place a property insurance company in receivership, making it the sixth Florida property insurer declared insolvent this year amid widespread financial problems in the industry.
The Florida Department of Financial Services sought to be appointed receiver for FedNat Insurance Co., which canceled 56,500 policies in May and reached an agreement to transfer about 83,000 policies to another company in June.
Despite shedding the policies, FedNat remained responsible for claims and other types of obligations from before June 1, according to court documents. It notified the state Office of Insurance Regulation on Sept. 13 that it did not have enough money for what is known in the insurance industry as a “runoff” of the obligations.
What may be Florida’s most destructive hurricane is threatening to swamp the state’s property insurance market, posing a stiff challenge to a star governor with national political aspirations.
Even before Hurricane Ian made landfall on Wednesday, the state’s property insurance market was buckling. Six companies had already fallen into insolvency this year as underwriting losses exceeded $1bn for the second consecutive year. Insurers, in turn, have been exiting the state and curtailing renewals, leaving homeowners with dwindling options for coverage and soaring prices.
“The homeowners insurance market in Florida has already seen escalating losses, increases in premiums, and insolvencies before there was a hurricane. Now with Ian, especially if this storm leads to litigation, it makes me wonder if the market can sustain this,” said Nancy Watkins, a principal and consulting actuary at Milliman.