Demotech, Florida's insurance rating agency has informed 17 property insurance companies that their ratings will be downgraded.
ABC Action News initially reported the changes in the ratings on Thursday evening after receiving a letter from the Florida Office of Insurance Regulation (OIR).
“We have never seen a mass rating downgrade at this level in U.S. history,” said Mark Friedlander with the Insurance Information Institute.
These carriers will have their financial stability rating downgraded from an “A” meaning "Exceptional to an “S” meaning "Substantial" or "M" meaning "Moderate."
This downgrade leaves companies at risk of entering receivership with the state resulting insolvency. “Historically speaking we’ve seen many companies that are downgraded fail,” Friedlander said.
That’s because federally backed mortgages require insurance companies to be A-rated. Now, thousands of Florida policyholders could soon find themselves in default of their mortgage requirements.
“Insurance agencies are going to be in crisis mode for the next several weeks, once we learn who these insurance companies are and how many policyholders are impacted, because many of their customers are going to have to be placed with a new carrier,” Friedlander said.
Friedlander said if you’re a homeowner do not panic but call you insurance agent.
“They will shop your coverage and they will help you land coverage so that you don’t become in default,” Friedlander said.
ABC Action News reached out to Demotech, to find out which carriers will be downgraded, and have not heard back. We will stay on top of this as we continue to cover the insurance crisis in our state.
