TALLAHASSEE – An insurance ratings agency has withdrawn the financial ratings of two more Florida property insurers, bringing the total number of withdrawals or downgrades to five this week.
Demotech on Tuesday withdrew the ratings of Bankers Specialty Insurance Co. and First Community Insurance Co.
The withdrawals were reported Wednesday morning by the Insurance Journal.
On Monday, Demotech withdrew ratings for Weston Property & Casualty Insurance Co. and FedNat Insurance Co. and downgraded United Property & Casualty Insurance Co.
The Demotech decisions reflected widespread financial problems in Florida’s property-insurance market.
Financial ratings are important, in part, because mortgage-industry giants Fannie Mae and Freddie Mac require homes to be insured by financially sound companies. For insurers rated by Demotech, Fannie Mae and Freddie Mac require “A” ratings or better. If insurers do not meet those standards, homeowners could be forced to find other coverage.
The Florida Office of Insurance Regulation announced a program last week that seeks to allow homeowners to maintain coverage if insurers get downgraded by Demotech. That program involves the state’s Citizens Property Insurance Corp. acting as a financial backstop. Citizens is taking on a reinsurance role to help make sure claims get paid if private insurers go insolvent.
United Property & Casualty on Tuesday became the first insurer to participate in the program after its downgrade. It was not immediately clear Wednesday whether the four companies that lost their ratings would participate in the program. Bankers Specialty Insurance Co. and First Community Insurance Co. are part of the St. Petersburg-based Bankers Insurance Group.