- The Florida Insurance Guaranty Association (FIGA) approved of an emergency assessment on its members to raise funds for payment of covered claims linked to the liquidation of United Property & Casualty Insurance Company.
- The one percent hike will be imposed on all lines of insurance in Florida except auto.
- The non-profit FIGA, established to protect policyholders in the event of an insurance company’s insolvency, provides a safety net for policyholders.
- Policy writers are expected to transfer the supplementary fees to their customers, having been provided with an unspecified time frame to implement the one percent charge, which will continue until a $150 million bond is entirely settled.
Insurance holders in Florida will experience a one percent rate hike due to an emergency assessment approved by the Florida Insurance Guaranty Association (FIGA). The assessment is an additional fee charged by FIGA on its members to raise funds for the payment of covered claims linked to the liquidation of United Property & Casualty Insurance Company.
The state Office of Insurance Regulation imposed a similar one percent emergency assessment on all covered lines of business except auto, meaning that all insurance companies in Florida, except for auto insurance, will also be charged the extra one percent fee.
FIGA, a non-profit organization established to protect policyholders in the event of an insurance company’s insolvency, provides a safety net for policyholders by paying claims that the insolvent insurance company is unable to pay.
The non-profit is funded by its member insurance companies, who are required by Florida law to participate in FIGA and contribute to its funding.
Per the published order, FIGA is borrowing $150 million in short-term financing and will subsequently issue approximately $750 million in revenue bonds to pay off the short-term financing and to pay the remaining claims.
It is expected that policy writers will transfer the supplementary fees to their customers, and they have been provided with an unspecified time frame to implement the one percent charge, which will continue until the bond is entirely settled.
“FIGA members will be able to recoup the one percent emergency assessment from their policyholders over the Assessment Year starting October 1, 2023 through September 30, 2024 and continuing until the bonds have been paid in full,” reads the order. “FIGA will send a notice to all Member Insurers on or before June 30 of the final Assessment Year in which the Bonds will have been repaid in full and are no longer outstanding, informing Member Insurers that they may end collection of the 1% emergency assessment on September 30 of that final Assessment Year.”
United Property & Casualty Insurance was deemed insolvent by the state in February following reports of severe financial problems. Months before insolvency, with approximately 135,000 customers, the insurer announced that it would exit the Florida property insurance market.
The one percent hike comes just weeks after three of the state’s top property insurance providers — Citizens Property Insurance Corp., Kin Interinsurance Network, and First Community Insurance Co. — requested the Office of Insurance Regulation (OIR) to approve their proposed rate increases for the upcoming Fiscal Year.
In late March, the Citizens’ Board of Governors internally sanctioned a proposal that grants organizational leaders the opportunity to petition the OIR for authorization to implement a 14.2 percent hike in insurance expenses.
According to the group, the recommended rates for 2023 call for a statewide average increase on all personal lines policies including homes, condominium units, dwellings, renters, and mobile homes due to inflation in the construction market.
Specifically, homeowner policy rates would increase by an average of 13.9 percent while condo owners would see an average 14.6 percent increase. If approved by the Office of Insurance Regulation, the 2023 rates would go into effect for new and renewal personal residential policies beginning November 1.
Later that week, both Kin Interinsurance Network and First Community Insurance Co. appeared before the OIR seeking authorization to increase rates. First Community sought an average 44.8 percent increase for homeowner multi-peril policies, while Kin filed for an average 61.5 percent increase on such policies.
All three policy writers claimed a need to raise rates following a busy hurricane season that saw billions of dollars of damage statewide.
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Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.