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Florida’s property insurance crisis needs a comprehensive fix

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You would think state leaders would choose their words more carefully when dealing with the sole property and casualty rating agency standing between states. our insurance crisis And a full-blown meltdown in the housing market. You can’t win friends or influence people by just swearing.

last month, Demotech Co., Ltd.Ohio-based financial rating agency . has announced that it will downgrade 17 private insurers operating in Florida. The move sparked sharp reactions from state leaders, including unproductive complaints to the Federal Mortgage Agency about Florida’s only property insurance rating agency.

In a letter to Fannie Mae, Freddie Mac and the Federal Housing Finance Agency, Florida’s Chief Financial Officer said: Jimmy PatronisDemotech, Inc., called it a “rogue rating agency” and “wreaked havoc on the economic lives of millions of Floridians”. It’s from a man who seems more interested in knocking out President Biden and the IRS than finding a way around it.

The ruckus against Demotech may have bought the states time. Rating agencies have postponed an originally planned downgrade, but the state’s whining by his CFO is no real substitute for comprehensive policies to keep property insurance viable and affordable. Hmm.

For subscribers: P&C market in ‘very precarious position’ as hurricane season approaches

In 2019, Floridians paid an average homeowner premium of $1,988. Currently, he is worth $4,231, according to an analysis by the Insurance Information Institute. Property and casualty insurers that still offer homeowners insurance continue to face the threat of liquidation. as a result, Civil Property Insurance Co., Ltd.a state-backed “last resort” insurer, is growing rapidly. the only viable option.

Citizens spokesman Michael Pelletier told Post reporter Hannah Morse, “When markets are healthy, Citizens are smaller because private companies take advantage of favorable market conditions.” We grow when we are in difficult times.”

With the state facing the high point of the hurricane season, there are no more risks. Homeowners relying on federally backed mortgages need highly rated insurers that meet Fannie Mae and Freddie Mac insurance requirements. Lower ratings typically force policyholders to pay more for new coverage, especially for homeowners whose homes are paid for through federally-backed mortgages.

Gov. Ron DeSantis calls for special session to address property insurance crisis

Indeed, Governor DeSantis has called a special session of the Florida legislature to address the crisis. As a result, more money has been set aside for reinsurance to help struggling insurers. The move was strengthened this month when the Florida Department of Insurance Regulatory announced plans to set up temporary reinsurance agreements through Citizens Property Insurance Corporation to bolster insurers. Current storm season.

The arrangement satisfies “exceptions” that allow struggling insurers to obtain reinsurance. This allows you to provide insurance and meet federally-backed mortgage requirements. Unfortunately, the exception won’t help much if Demotech is forced to downgrade further or leave Florida altogether.

Worse, the state’s efforts to deal with the crisis have not softened the insurance industry, which has linked climate change and ongoing lawsuits to factors that make Florida a dangerous place to do business. The Special Session, which drafted legislation that favored the insurance industry over consumers, was met with a collective “well” from the industry.

For subscribers: Will the latest property insurance laws be enough to help Florida homeowners?

It’s not that the state doesn’t see this. The major insurers that bundle home and auto insurance in other states abandoned Florida a few years ago, so homeowners here may be willing to take the risk, but they’re not. I was left with a smaller insurer who needed more help getting reinsured from. .

“I really think the only way to deal with property insurance is through national disaster insurance, similar to what the federal government did with the floods,” State Sen said.Lori Berman, D-Delray Beach told the Post Editorial Board. “I hope the reinsurance band-aid works, but I’m not sure.”

Whether the solution is market-driven or government-driven remains to be seen. But so far the only plan seems to be to hope the hurricane doesn’t hit.

If state leaders like Patronis are serious about tackling property and casualty insurance, they would be better off taking a more proactive approach to the industry and appropriate federal agencies. It’s clear that simply reacting to events won’t work. Whining about the last permanent rating agency doesn’t help either.

For more information on opinion content and editorials, please visit the opinion section of The Palm Beach Post.

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