[ad_1]
Read more: Ratings downgrade of 17 insurers granted stay of execution – for now
The reinsurance arrangement will be run through the state’s last resort carrier Citizens, FLOIR updated. The solution would enable insurers to meet an exception offered by federally backed mortgage providers Fannie Mae and Freddie Mac to ensure homeowners’ insurance coverage can be maintained during hurricane season.
“OIR’s greatest priority is ensuring consumers have access to insurance, especially during hurricane season; and because of the uncertainty with the status of Demotech’s ratings, we’ve been forced to take extraordinary steps to protect millions of consumers,” said Insurance Commissioner David Altmaier.
“This innovative arrangement satisfies requirements set by the secondary mortgage market. In the event we need to implement this temporary solution, consumers will not need to seek coverage elsewhere, agents will not need to move policies, and lenders can have confidence that these insurers continue to meet the mortgage qualifications.”
Fannie Mae and Freddie Mac require that insurance policyholders who have a mortgage backed by them must have property insurance policies underwritten by insurers that meet financial ratings requirements.
They would be required to have an A rating, but under ratings changes mooted by Demotech a slew of carriers could find themselves with an S rating (substantial) or an M rating (Moderate).
However, Fannie Mae and Freddie Mac offer an exception for insurers covered by a reinsurer that assumes 100% liability for payable losses in the case the carrier enters insolvency.
In the event an insurer is declared insolvent, the Florida Insurance Guaranty Association will carry out its statutory duties and pay claims as set out in the statute, FLOIR said.
Altmaier had previously decried the potential ratings move by Demotech as “an example of inconsistent, monopolistic power of a select rating agency”.
Read more: Property insurers cull – 17 downgraded in one swoop
Kyle Ulrich, CEO of the Florida Association of Independent Agents, also criticized Demotech in a blog last week.
“It is abundantly clear that Florida’s property market has been held hostage by unscrupulous trial lawyers, public adjusters, and contractors for years,” Ulrich said in the blog.
“Now, the actions of one rating company could add to the list.”
Demotech president Joe Petrelli has labelled the criticism “misinformation”.
[ad_2]
Source link
