Nine Florida homeowners insurance companies, listed below, have entered into liquidation in recent years. Other Florida homeowners insurance carriers have announced plans to either cut back or stop writing new policies.
Panel counsel law firms for Florida homeowners insurance carriers will want to keep one eye on their claims files while also actively looking for ways to diversify their client base. This article summarizes the current situation and offers strategic business development options for Florida insurance defense law firms.
Avatar Property and Casualty Insurance Company
Date of Liquidation: March 14, 2022
Policy Cancellation Date: April 13, 2022
Claims Filing Deadline: March 14, 2023
As of this date, the Avatar website cautions its insureds that Bank of America is not currently honoring claims checks that were issued by the insurance company.
St. Johns Insurance Company, Inc.
Date of Liquidation: February 25, 2022
Policy Cancellation Date: March 01, 2022
Claims Filing Deadline: February 27, 2023
The Orlando-based St. Johns is listed as the eighth-largest homeowners carrier in Florida, with more than 160,000 policies, according to a list maintained by the Florida Association of Public Insurance Adjusters.
Gulfstream Property and Casualty Insurance Company
Date of Liquidation: July 28, 2021
Policy Cancellation Date: August 27, 2021
Claims Filing Deadline: July 28, 2022
The transactions listed below either have been or will soon be completed.
American Capital Assurance Corporation
Date of Liquidation: April 14, 2021
Policy Cancellation Date: May 14, 2021
Claims Filing Deadline: April 14, 2022
Windhaven Insurance Company
Date of Liquidation: January 06, 2020
Policy Cancellation Date: February 05, 2020
Claims Filing Deadline: January 06, 2021
Florida Specialty Insurance Company
Date of Liquidation: October 02, 2019
Policy Cancellation Date: November 01, 2019
Claims Filing Deadline: October 02, 2020
Sawgrass Mutual Insurance Company
Date of Liquidation: October 01, 2018
Guarantee Insurance Company
Date of Liquidation: November 27, 2017
Sunshine State Insurance Company
Date of Liquidation: 6/3/14
Louisiana Puts Lighthouse Property Insurance into Receivership
The Louisiana Insurance Commissioner announced on April 11, 2022 that the state placed homeowners insurance company Lighthouse Property Insurance Corporation (Lighthouse Excalibur Insurance Company) into receivership in the 19th Judicial District Court. The Louisiana Insurance Guaranty Association (LIGA) will take over claim payments, with the intent that most policyholders with pending hurricane claims will get paid. Click for details on the Louisiana receivership status for Lighthouse Property.
Lighthouse Property Insurance of Tampa notified agents that it was suspending new business writing for all products in Florida as of February 15, 2022, according to InsuranceJournal.com. The company website does not appear to reflect this latest information on Florida policies as of this date.
United Insurance Holdings Corp. to Reorganize
United Insurance Holdings Corp. of St. Petersburg, Fla., a publicly-held property and casualty insurance holding company (Nasdaq: UIHC), proposed a reorganization plan on April 11, 2022 that will consolidate its four Florida domiciled insurance carriers into three.
The Company intends to seek regulatory approval to merge Journey Insurance Company into American Coastal Insurance Company with American Coastal being the surviving entity. Journey’s will be redistributed between American Coastal Insurance Company, Family Security Insurance Company, and United Property & Casualty Insurance Company.
Progressive and Lexington (AIG) Pull Back
InsuranceJournal.com reported recently that Progressive plans to drop 56,000 Florida homeowners policies. When searching for Florida homeowners coverage on Progressive’s website, the company notes that “Progressive Home® policies are placed through Progressive Advantage Agency, Inc. with insurers affiliated with Progressive and with unaffiliated insurers. Each insurer is solely responsible for the claims on its policies and pays PAA for policies sold.” Click for Progressive’s network of homeowners carriers.
The news site also reported in late March that Lexington Insurance, an AIG excess and surplus (E&S) unit, plans to retreat from the Florida homeowners insurance market. The carrier’s 8,000 Florida policyholders will either be cancelled or non-renewed. Since these are higher value homes, they are likely not to qualify for coverage by Citizens.
Florida Farm Bureau Stops Writing Florida Homeowers Policies
Farm Bureau announced in late January that it would stop writing new homeowner policies in Florida, according to InsuranceJournal.com.
The insurance rating firm AM Best downgraded the rating for Florida Farm Bureau Casualty Insurance Company and its fully reinsured subsidiary, Florida Farm Bureau General Insurance Company, as of March 25, 2022. The Financial Strength Rating (“FSR”) was dropped to B++ (Good) from A- (Excellent). The FSR longer term outlook was revised from negative to stable.
While recognizing strength in the Florida Farm Bureau’s balance sheet, AM Best noted that the group’s results through year-end 2021 reflect a 28% surplus decline from the prior year and a cumulative decline of 35% over the most recent five-year period.
Insurance Policy Cancellations
Universal Insurance Company of North America (UNICA) received approval from the Florida Office of Insurance Regulation on May 6, 2021 to cancel 13,294 policies with 45 days notice. At the time UICNA had 57,000 policies in force in Florida, primarily for homeowners insurance coverage.
Florida Homeowners Insurance Market Dynamics
Excessive litigation, high attorneys’ fees for claimants, the assignment of benefits (“AOB”), a Florida Supreme Court ruling on the concurring cause doctrine, and insufficient legislative action all play a role in the current market conditions.
Guy Fraker of cre8tfutures Advisory issued a comprehensive, well-cited 2021 report on the situation titled, Florida’s P&C Insurance Market: Spiraling Toward Collapse.” Graph 9 in the report summarizes the situation by listing the following statistics:
- 60,328 total lawsuits filed in 2020 with an average litigation severity of $47,350.
- Total 2020 costs of $2.79 billion are broken down into indemnity costs (8% or $229 million), defense costs (21% or $585 million) and estimated fees (71% or $1.98 billion).
PropertyCasualty360.com reports: “In 2019, Florida accounted for 8.16% of all homeowners claims opened in the United States and 76.45% of all homeowners claims litigation filed against insurers in the U.S.”
Implications for Panel Counsel at Florida Homeowners Insurance Carriers
Once a Florida homeowners insurance company enters liquidation, the Florida Insurance Guaranty Association (“FIGA”) takes responsibility to help pay outstanding Florida claims for property and casualty policies.
Panel counsel law firms will want to start looking for new business to replace an insurance carrier client at the first sign of trouble. This becomes more difficult due to the shrinking market and competitive pressures from other Florida law firms trying to do the same thing. Citizens is the carrier of last resort, and dozens of law firms are already on the Citizens panel. (Citizens announced its current multi-year panel selection in October 2021.)
Client diversification can be approached more broadly. There may be opportunities to work with self-insured entities, for example, that hire their own defense law firms. Looking to expand by market adjacency, law firms might want to pursue property claims business from commercial landowners, apartment building owners, or mobile home parks.
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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.