Homeowners insurance crisis: DeSantis says ‘significant reforms’ coming as company drops 68K policies

Homeowners insurance crisis: DeSantis says ‘significant reforms’ coming as company drops 68K policies

Article Courtesy of Channel 8 On Your Side

By Mahsa Saeidi

Published May 21, 2022

TAMPA — With two weeks left until the start of the Atlantic hurricane season, Florida homeowners are scrambling.

FedNat Insurance Company and its sister companies are cancelling more than 68,000 policies, 8 On Your Side has learned. The news comes one week before the property insurance crisis special session is scheduled to begin in Tallahassee.

A few years back, FedNat Insurance Company was one of the largest carriers in the state. Last year, they reported more than $103 million in net losses. Last month, they were downgraded by the rating agency Demotech.

FedNat is now dropping 68,200 policies to stay afloat, desperate to reduce their exposure in Florida. Florida’s Insurance Commissioner David Altmaier signed a consent order on Friday allowing FedNat to drop the policies.

Commissioner Altmaier wrote that the early cancellation is an “extraordinary” step reserved for companies in “hazardous financial condition.”

The cancellation notices will soon be hitting mailboxes. Policyholders will have just 45 days to find new coverage. Time will be up June 29 – in the midst of hurricane season.

Man behind most Florida insurance company ratings paints grim picture if crisis isn’t addressed by hurricane season

“Failing, I think, is just not an option,” Gov. Ron DeSantis said Monday, spelling out Florida’s lawsuit problem. “We have 8% of the property claims nationwide and 78% of the litigation nationwide.”

According to data released by the Office of Insurance Regulation, three out of four property insurance lawsuits in the entire country in 2019 happened in Florida. The state had no major hurricane that year.

“We did a package last year that had some good stuff but it just didn’t do enough, I think, to really stabilize this situation,” Gov. DeSantis said. “This is a market that has been problematic in this state for a long time.”

Right now, legislation is being finalized for the special session. Sources tell 8 On Your Side the bills outlining changes could be filed by Wednesday.

“The good news is, on property insurance, I think we’re going to get really, really significant reforms,” said Gov. DeSantis.

The situation is dire, with fewer companies in Florida, more policy restrictions on the age of your roof and rates at an all-time high. Many policyholders may end up with Citizens, the state-backed company, or with no coverage at all.