Late yesterday (Monday), Demotech affirmed the financial rating of all of the carriers we mentioned previously in our last blog. No word why these carriers took so much longer to review than the others. If we look at the Florida property insurance carriers as a whole, many of them saw significant increases in their claim expenses especially in particular areas in and around Orlando, FL. In a hearing conducted before the Office of Insurance Regulation, Captiol Preferred Insurance Company CEO stated the significant rise in cost is mostly attributed to attorney represented claims which rose from about 4% to close to 36% in a short time period. The Assignment of Benefits (AOB) bill that was passed apparently has not slowed down the frequency of those claims.
Another issue these carriers will face is their reliance on reinsurance will lead to increased costs of their products due to the rise in cost of reinsurance. Some estimates I've seen state the cost could rise another 25%. This may hit coastal markets harder than inland markets but I'm sure most people will see a rise in their premiums.
There are some grumblings in the industry about Demotech stating they would downgrade as many as 18 carriers and then ultimately affirmed almost every single one. This may give our industry the appearance of not standing on a proper financial footing. Since we ultimately rely on these financial rating companies like Demotech to assure us of financial solvency, all we can do is focus on writing proper coverage limits, including endorsements which improve the policy, and compare policy language to find the best products for our clients.
The following carriers affirmed their A (Excellent) rating by Demotech late on Monday:
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Avatar Property & Casualty Insurance Co (Last affirmed 12/3/2019)
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Cypress Property and Casualty Insurance Co (Last affirmed 12/3/2019)
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Omega Insurance Company (Last affirmed 12/3/2019)
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Prepared Insurance Company (Last affirmed 6/27/2019)
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Safepoint Insurance Company (Last affirmed 12/4/2019)
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Tower Hill Select Insurance Company (Last affirmed 12/3/2019)
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Tower Hill Signature Insurance Company (Last affirmed 12/3/2019)