Florida axes another carrier: FedNat sixth insurer declared insolvent this year
Florida moved to wipe out its sixth insurance carrier of the year, determining that restructuring to date at FedNat Insurance isn't enough to clear the bar.
The Florida Department of Financial Services filed in court to be named as receiver for the firm as it shuffled the carrier to liquidation, a court filing indicates.
"Due to Respondent’s financial condition, its continued operation of the insurance business is hazardous to policyholders, creditors, stockholders and the public," the state office claimed.
The Florida domestic homeowners’ market has now suffered 24 insolvencies out of some 80 firms that have dabbled in the market since hurricane Andrew in 1992, David Paul of Alirt Research noted in a comment to developments.
"That’s a 30% failure rate and an indictment of the artificial market structures that Florida legislators/OIR have hobbled together over the past thirty years," Paul wrote.
The company has been under intensified regulator surveillance since releasing the 2019 financial statement in March 2020.
"Despite capital infusions, Respondents surplus continued to decline and its underwriting losses continued to increase throughout the remainder of 2020 and into and throughout 2021," the state's filing claimed.
A 2022 remediation plan included capital reorganisation, cancellation over 56,500 policies, and a run-off programme.
Regulators determined by September 21 that cash-projections had been overstated and a solvent run-off could not be guaranteed, the document indicated.
The move could fray nerves, arriving just as Hurricane Ian bears down on the west coast of the Florida panhandle. Landfall is currently expected for Wednesday (September 28).
And the ranks of clients at the state insurer of last resort, Citizens, could swell yet again.
Citizens swept up business throughout 2022. The in-force policy count has risen 35% year-to-date to nearly 1.03 million in 2022.
In the first half, the Florida state insurer of last resort accounted for more than half of the aggregate annual increase in direct written premiums amongst Florida-focused insurers on a 78% year on year gain, a dataset collected by Gallagher Re recently indicated.
Citizens may be sweeping up some seemingly good business: the firm's net loss and loss adjustment ratio at 52.6% came down 18 percentage points on the prior year period and proved over 20 points better than the broader industry aggregate.
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