The good news is that our recent run of trouble-free hurricane seasons has seemingly enabled not just the state government, but also the insurance industry to make preparations and replenish capital in advance of the next catastrophe.

As reassuring as all this may seem, a recent report from Fitch Ratings, one of the three largest credit rating agencies in the U.S., has called these efforts by the insurance industry into question.

Specifically, after examining 32 insurance companies, all of which derive the majority of their profits via the homeowners’ insurance market, Fitch researchers determined that their respective abilities to respond to a catastrophic hurricane were “uncertain” at best and that none would likely earn the company’s coveted “A” ratings.

While the findings were all hypothetical given that Fitch does not actually provide ratings for the Florida homeowners’ insurance market, it has nevertheless served to create something of a stir in many industry circles.

The question naturally arises then as to how Fitch arrived at these conclusions concerning the state’s relatively new homeowners’ insurance companies, which collectively hold upwards of 60 percent of the market for hurricane coverage, and are actually rather well-funded given the recent dearth of weather events and influx of Citizens Property Insurance customers.

Some of the factors cited by the Fitch report for awarding the state’s fledgling homeowners’ insurance companies such low marks, include:

  • Their small size and scale
  • Their narrow product line
  • Their limited geographic profile
  • Their low surplus levels
  • Their reliance on reinsurance (i.e., insurance purchased by insurers)   

It’s worth noting that a simulated stress test of three major catastrophic storms run by the state Office of Insurance Regulation last October determined that 67 participating insurers had more than sufficient levels of capital and surplus.

Here’s hoping we see another tranquil hurricane season.

Has Your Home Insurance Company Denied or Undervalued Your Property Damage Claim in Florida?

If your insurance company is dragging its feet regarding your property damage claim you should speak with an experienced insurance claim lawyer as soon as possible. Please contact us online or call our Florida law office directly at 800.451.6786 to schedule your free consultation. We help Florida residents just like you fight the big insurance companies who fail to abide by their own policies. Remember, we work on a contingent basis, meaning you don't pay us anything until we win your case. 

K.C. Williams III
Managing Partner who has spent his entire career representing Florida insurance and personal injury claims.