27 (not 17) FL Insurers marked for Downgrade by Financial Ratings Company (Weston: health insurance, mortgage)

[Sunshine Rules]

I saw a story about this on the local Spectrum news 9 channel, but little mention elsewhere:

27, not 17, Florida insurers marked for downgrades. Officials warn of havoc for homeowners

State insurance companies are bracing for the impact of plans revealed by an Ohio-based financial strength ratings agency to downgrade ratings of a majority of Florida-based property insurers that it evaluates. Angry letters from Florida Insurance Commissioner David Altmaier and Chief Financial Officer Jimmy Patronis released on Thursday blasted the ratings firm Demotech and its CEO Joe Petrelli for telling “approximately 17″ insurers that their A ratings, which stand for “Exceptional” or “Unsurpassed,” will be downgraded on July 26 to S “substantial,” or M “moderate.”



A follow up story stated the following:

The CEO of Ohio-based Demotech, who last week sent letters to 27 insurers telling them that their financial strength ratings would be downgraded on July 26, on Monday afternoon sent a letter to Insurance Commissioner David Altmaier calling it off “until further notice.”

and

Fannie Mae and Freddie Mac requires homes it backs be insured by A-rated carriers. Numerous Florida carriers are only rated by Demotech, meaning loss of their A rating could put policyholders at risk of having more expensive coverage force-placed by their mortgage loan servicers.

Altmaier and Florida Chief Financial Officer Jimmy Patronis on Thursday wrote Demotech, demanding to know why it had seemingly reached beyond its quantitative ratings methodology and planned to downgrade the companies based on the company’s pessimistic view of Florida’s insurance market.


Last Paragraph:

The release said that Demotech’s most recent letter to insurers “appears to be an attempt at showing the company’s strength and power in Florida.” It also noted that Demotech has previously issued notices of its intent to downgrade companies in 2017, 2018, 2020, 2021 and 2022 — warnings “that never came to pass.”



The story is worth reading at: https://www.msn.com/en-us/news/us/in...als/ar-AAZXG6s

[beach43ofus]

My insurance broker who has been in the business here for 30+ years, says the ratings companies are bogus...Demotech is the biggest, but not the only only one. She told me if a major Hurricane hits in a populated area of Florida, there are very few Insurors who could pay all of it claims out, according to the policies they've written.

[wizrap]

Got this article in one of my online insurance magazines. Florida is setting up a temporary reinsurance plan to guarantee payment of claims, to appease Fannie and Freddie. I guess the state feels Demotech means business this time.

https://ga.kmnewsletters.com/ga/clic...1c3-qa13961860

[beach43ofus]

After the great recession, the lender ratings companies were sued, & some lost. Firms like Moody's, Standard & Poor's, Fitch, ect.., so there's precedent of them having to pay for bogus ratings.

Sounds like Demotech is protecting themselves, which is good for them and Florida consumers.

[PasDeSoleil]

Credit Rating firms and ancillary types of agencies have been talked into rating even mortgage-backed pass-throughs triple-A, when everyone who was selling this crap on Wall Street knew it was practically junk in the first place. Nothing new with criminals who get paid off on WS.

[beach43ofus]

The State of Florida need to crack down on fraud and tort laws to reduce the legal exposure/costs for insurors. How to do that w/o eroding homeowners rights is the tricky part, so I'll leave that up to the States legal team.

I've read Florida's insurors have massive legal costs in Florida they do not have in other states, & that is the root cause for all of this "market collapse" talk. Too many failed lawyers chasing too few dollars.

Our President would suggest retraining the failed lawyers to become software coders.

[Sunshine Rules]

UPDATE:

Florida’s insurance commissioner has declared Weston Property & Casualty Insurance insolvent after Demotech withdrew the company’s rating.

Demotech this week also withdrew financial stability ratings for FedNat Insurance Co. and changed United Property & Casualty Insurance Co.’s rating from "A Exceptional" to "M Moderate,” the Associated Press reported.

[beach43ofus]

The weakest insurors are being weeded out, and the stronger ones will survive, which is good for Florida homeowners in the long run. The field of providers was too large, & some poorly managed.

The laws are not being changed fast enough to stop fraudsters either, so I hope DeSantis is pressing the states lawmakers very hard on progress. All they need to do is make the assignment of rights forms illegal in the homeowner insurance industry. All transactions must be between the homeowners and their insurance company directly...no 3rd party intermediaries. Of course either party can take legal action if they see fit.

This would eradicate the fraudsters.

[loves2read]

Originally Posted by Sunshine Rules

UPDATE:

Florida’s insurance commissioner has declared Weston Property & Casualty Insurance insolvent after Demotech withdrew the company’s rating.

Demotech this week also withdrew financial stability ratings for FedNat Insurance Co. and changed United Property & Casualty Insurance Co.’s rating from "A Exceptional" to "M Moderate,” the Associated Press reported.

Thanks for this
Will pass along to my husband

[PasDeSoleil]

Fraud is endemic throughout all lines of insurance that is hawked in the state of Florida.


Homeowners is probably one of the least among them, given unbelievable scams and misrepresentions fomented by Long Term Care (esp two companies in SRQ), Life Insurance, Variable Annuities, and some forms of Health Insurance...and especially Workman's Comp and Disability.


Competition is good for the insurance industry, not consolidation.