Associated Press
A ratings agency has plans to downgrade more than two dozen Florida-based property insurance companies in a move that could cost more money for homeowners with loans.
The ratings firm Demotech plans to downgrade the 27 insurers from an “A” rating to ratings of either “S” for substantial or “M” for moderate, according to the South Florida Sun Sentinel.
Demotech rates 40 Florida-based insurance companies.
Florida Insurance Commissioner David Altmaier and Chief Financial Officer Jimmy Patronis criticized the ratings agency for the downgrade planned for later this month. They said the decision was based largely on the company’s opinion that legislative reforms enacted over the past two years were not enough to bring the state’s overall insurance market back to health. The market has been facing losses over the past five years.
By doing that, the ratings firm was a applying methodology that fell outside the criteria it is supposed to use, the Florida officials said in letters.
“This is an example of inconsistent, monopolistic power of a select rating agency and is trying to exert coercive influence over Floridians and policymakers in an effort to thwart public policy according to its own opinions,” Altmaier said in his letter.
Federal mortgage loan guarantors Fannie Mae and Freddie Mac require borrowers of loans it backs to maintain insurance coverage with A-rated insurers. Borrowers with insurance backed by companies rated below A could find themselves in default of the terms of their home loans. If that were to happen, Fannie Mae and Freddie Mac could then order mortgage servicers to get more expensive coverage by acceptable insurers on the home loans they manage.
From a homeowners’ perspective, the timing is bad, said Paul Handerhan, president of the consumer-oriented watchdog group Federal Association for Insurance Reform.
“Can you imagine, with the height of hurricane season around the corner, if you just paid your insurance bill for the year and suddenly your mortgage servicer says, ‘You’re out of compliance and we’re going to force-place you’ and charge $5,000 or $6,000? That’s a real potential,” Handerhan said.
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Republished with permission from The Associated Press.
5 comments
Joe Corsin
July 24, 2022 at 4:00 pm
Vote RED for abominable far right filth
Vote RED for grifting and greed
Vote RED for theocracy
Vote RED for death
Don’t Look Up
July 24, 2022 at 6:07 pm
MESSAGE FOR THE FREEDUMB STATE OF FLORIDA GOVERNOR’S DESK:
“Whatever you do Floridians ……DON’T LOOK UP!”
Mike McD
July 25, 2022 at 8:34 am
I own an insurance agency. This is 100% the fault of the trial lawyers (by law, getting 1500% above normal and customary hourly rates for insurance claims), public adjusters (taking 20% of these claims, flying drones into neighborhoods) and dirty roofers (who scared homeowners into assigning their benefits over to this unholy trinity)!! They caused this. The blood is on their hands. How can we stay in business under these conditions?? Answer: We can’t.
NBL
July 25, 2022 at 9:13 am
It’s also insurers’ faults, for the seedy way they do business: defining what the homeowner must do to repair a roof and then denying coverage even though the work was done EXACTLY as they specified.
Steve M
July 25, 2022 at 9:43 am
While the actions of Demotech are self-serving and deplorable, the reality is there’s plenty of fault to go around. While some insurance carriers don’t do the right thing, many carriers and adjusters focus on making their insureds whole after a loss. One-way fee statutes, outdated bad faith laws, unscrupulous attorneys, public adjusters, and naive jurors prevent insurers from defending fraudulent claims. When did an insurance policy become a home warranty or maintenance policy? Roofs, be it shingle or tile have a life expectancy and wear out! Many homeowners fall victim to predatory tactics of attorneys and public adjusters operating in tandem to convince the insured/homeowner to assign their rights under the policy, Want to find the fraud, follow the money!
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