All insurance policies in the state, except for auto insurance, will have a 0.7% assessment tacked onto them starting in 2023 as a result of a series of liquidations among insurance companies this year.
The Florida Insurance Guaranty Association, which administers claims of failed insurers ordered into receivership, recommended the assessment earlier this month, and the Office of Insurance Regulation approved it Friday when it issued an official order.
The assessment of 0.7% of the premium will be placed on non-auto policies starting Jan. 1, and will last throughout 2023. The assessment is on top of a 1.3% assessment FIGA recommended and OIR ordered in March that will last from July 1 to June 30, 2023.
Florida residents were already paying a 0.7% assessment this year because of an October 2021 order from OIR at the recommendation of FIGA for previous insurance failures. That assessment, though, will subside at the end of the year. State law caps FIGA assessments at 2%, so the new 0.7% assessment will take over as the previous one ends.
Five insurance companies have failed in the first eight months of the year: St. Johns Insurance Company, Avatar Property and Casualty, Lighthouse Property Insurance Corporation, Southern Fidelity Insurance Company and Weston Property and Casualty Insurance Company.
The failures are a symptom of Florida’s beleaguered property insurance market. Lawmakers set up a taxpayer-backed $2 billion reinsurance fund during a Special Session in May to try to stabilize the market. A dearth of reinsurance, combined with surging losses due in part to costly lawsuits has led to massive losses in recent years for the industry.
Despite the move, insurers such as Southern Fidelity and Weston continued to fail.
Demotech, an Ohio based ratings agency, threatened to downgrade or withdraw ratings for 19 companies in July, which brought out a swift condemnation from OIR and Chief Financial Officer Jimmy Patronis. In response, regulators allowed companies to use the surplus of Citizens Property Insurance Corporation, a state-run insurer of last resort, as a reinsurance fund for any company that goes bust.