Nine years after it received $74 million from Citizens Property Insurance Corporation for taking over its policies, Weston Property and Casualty Insurance Co. was ordered into liquidation, and most of its policies are likely headed back to Citizens.
In February 2013, state regulators approved Weston to take over up to 31,000 wind-only policies from Citizens and receive $63 million in Citizens premiums in return. Because homeowners and businesses were able to opt out of the takeover, Weston ended up assuming 25,295 policies in the deal, and receiving $60 million.
Combined with other takeover deals from 2012 and later in 2013, Weston received $74 million from Citizens in total.
Weston was ordered into liquidation on Aug. 8. Florida Association of Insurance Agents president Kyle Ulrich told the South Florida Sun-Sentinel that “it’s safe to assume most of the business” will wind up back in Citizens.
At the time of the deal, Citizens had 1.28 million policies, and then-Gov. Rick Scott, legislative leaders and Citizens officials were urgently trying to reduce the state-run insurer’s risk.
If a large enough hurricane or series of storms wipe out Citizens’ ability to pay claims, state law allows Citizens to charge assessments to pay off the claims and replenish their surplus. Assessments are first placed on Citizens customers, but assessments can also be placed on all homeowners policies in the state if the need arises.
But the Weston failure could lead to assessments on Florida homeowner policies anyway. When an insurer fails, the Florida Insurance Guaranty Association takes over administration of its policies and pays out any outstanding claims. An assessment can be placed on all homeowner policies to pay for the claims.
Citizens no longer uses such incentive deals with companies to take over its policies. The practice was essentially stopped after a similar deal with Heritage Property and Casualty later in 2013. In the deal, the company was less than a year old and had made a $110,000 donation to Scott’s political committee, and was eligible for $52 million for taking over 60,000 policies.
The political blowback to the Heritage deal, even from Republicans, led Citizens to stop using incentive deals, but the program remains in state law. And although Citizens policy count has risen to more than 1 million policies again, Citizens is unlikely to renew the tactic.
“Arrangements with Weston, Heritage and others took billions of dollars of exposure off Citizens shoulders, reducing the risk of assessments,” Citizens spokesman Michael Peltier wrote in an email. “A few things were tried — the Weston arrangement and Heritage arrangement — that in hindsight were a bit too creative and controversial.”
Without the prospect of incentives or bonus payments, the Office of Insurance Regulation (OIR) has approved Weston to take out 54,092 policies from Citizens since 2013, including 3,534 as recently as 2020. OIR spokeswoman Samantha Bequer issued a statement on the issue but didn’t specify why OIR approved financially troubled Weston for taking over Citizens policies so recently.
“In accordance with OIR’s mission to promote a stable and competitive insurance market for consumers, OIR explores all solutions, which includes increased participation in the voluntary market through depopulation plans,” Bequer wrote in an email.
Two other companies, Avatar and Southern Fidelity, that were approved for Citizens non-incentive takeover deals by OIR in the last 10 years also went bust earlier this year.
Weston’s failure is the latest hit to Florida’s fragile property insurance market. It’s the fifth company to be liquidated this year and the tenth since March 2021. Other companies have either stopped writing new policies, canceled some policies or are pulling out of Florida altogether. United Property and Casualty made the move to leave Florida on Thursday.
As the companies withdraw, Citizens, created by state lawmakers in 2002 as a backstop insurance company to cover homes the private market wouldn’t cover, has become the depository, growing to more than 1 million policies — double the nearly 500,000 policies it had in August 2020.
August 26, 2022 at 4:47 pm
Nothing to worry about. Rick Scott is off sailing the Southern Coast of Italy, Marco Rubio is trying to avoid talking about his huge abortion win at the Supreme Court and Ron DeSantis is campaigning for one of the most miserable Republicans in the State of Pennsylvania……and our Republican legislators are trying to spin the meaning of CRT to their political advantage.
FLORIDA…..YOU’RE ON YOUR OWN!
VOTE REPUBLICANS OUT OF OFFICE.
August 26, 2022 at 7:47 pm
“Weston was ordered into liquidation on Aug. 8.”
I notice that you didn’t report WHO ordered the company into liquidation, and why.
The answer, of course, is the court–specifically the Second Circuit Court in Tallahassee–upon action by the Florida Office of Insurance Regulation. They acted because the firm is illiquid. Who wants to be insured by a bankrupt company?
Why are they bankrupt? Well, as Boston NPR station WBUR reported, of the $15 billion that Florida property insurers have paid out in the past decade, ten percent went to policy owners and 70% went to LAWYERS. And the last time I checked, the Florida Democratic party was a wholly owned subsidiary of the Florida trial bar.
If you are truly a journalist, you would report these things.
August 27, 2022 at 11:30 am
Ron, I don’t believe you. Rona and his lapdogs controlling the Florida Legislature have done nothing to fix the State’s property insurance nightmare. When the big cyclone hits this year, we will be left holding the bag. Ain’t it great subsidizing all the rich folks with beachfront houses?
JR Ft Laud
August 30, 2022 at 4:06 pm
CPIC has a cap on the valuation of properties, $1MM in Miami-Dade and Monroe. Less in other counties. Not many “rich folks with beachfront houses” valued at $700,000 and less.
August 30, 2022 at 8:27 am
“Ron, I don’t believe you.”
“Rona and his lapdogs controlling the Florida Legislature have done nothing to fix the State’s property insurance nightmare.”
Florida’s geography and massive growth are making things hard, but most of the dough IS going to the lawyers and DeSantis and the Republican legislature IS trying to do something about it.
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