(WFLA) — In four days, a ratings agency plans to downgrade 17 property insurance companies in Florida, according to state officials.
State leaders warn financial chaos will follow and millions of Floridians could be impacted.
8 On Your Side Investigator Mahsa Saeidi reached out to several agencies to obtain the list of at-risk companies. As of Friday night, the state is not disclosing the list.
If the downgrades happen as planned, millions of Floridians will be in default of their mortgage requirements.
Insurance brokers told 8 On Your Side homeowners will be given a few months to find acceptable coverage.
If they can’t, their mortgage company would force them to accept a new policy with a new carrier.
Bottom line — homeowners will end up paying twice the price for half the coverage, multiple insurance experts said.
Ronald Assise CIC, CPRM is an insurance broker.
“With force-placed insurance, the only party protected is the mortgage company,” he said. “So you’re paying an outrageous premium and basically getting no coverage.”
If Demotech doesn’t back down under pressure can anything be done? That’s the question 8 On Your Side had for State Sen. Jeff Brandes, a Republican from Pinellas County.
Sen. Brandes has spearheaded the efforts to reform Florida’s market.
“This thing could get really ugly really quick,” Sen. Brandes said. “It’s gotta be the CFO, it’s gotta be OIR, it’s gotta be the governor.”
State leaders could aggressively push mortgage companies and federal regulators to accept a lower rating.
In April, 8 On Your Side interviewed Joseph Petrelli, Demotech’s president.
“How concerned are you about having to pull ratings?” asked Investigator Mahsa Saeidi.
“We take no solace in that, it’s no fun at all,” Petrelli said.
Months ago, Petrelli said trouble was brewing but state leaders would not even respond to letters he sent.
Mr. Petrelli sent this statement on Friday:
“I believe the Comments of the Governor, CFO, Commissioner and FAIA are based on their frustration with the status of Florida’s residential property insurance marketplace. Having first become involved in this marketplace in 1996, at the invitation of representatives of the state of Florida, we have consistently applied our applicable metrics and communicated our opinion to the carrier’s designated contact person on at least a quarterly basis. Often, on a monthly basis.”
The insurance companies are set to lose their ‘A’ rating but mortgage companies, including Fannie Mae and Freddie Mac, require that ‘A’ rating.
As it stands now, mortgage companies will not allow you to keep your policy with a downgraded company, industry experts said.
Gov. Ron DeSantis’ office sent the following statement after the announcement was made:
“We share the concerns expressed by Florida’s Chief Financial Officer (CFO) Jimmy Patronis and the Office of Insurance Regulation (OIR) regarding Ohio-based Demotech’s seemingly inconsistent application of its own methodology and its unilateral decision to downgrade numerous Florida insurers, affecting the policies of millions of Floridians. We will continue to monitor the situation and we support OIR in their core mission of providing stability to Florida’s insurance market.”