Florida Leaders Offer Plan to Protect Insurance Agencies Amid Downgrade Concerns

For almost a decade, COBIA Insurance has been committed to serving Brevard County and the surrounding communities. We promise to continue providing quality service to our clients for their insurance needs. Thus, we feel the need to be transparent with you concerning recent headlines. You may have read or watched reports about the state of insurance agencies in Florida. We want to break down what is happening and how COBIA Insurance plans to protect you.

Demotech: How are Insurance Companies Rated?

Demotech is noted as the primary rating system for many insurance companies in Florida, taking on this task since the 1990s. State leaders have expressed concerns that the financial stability ratings company plans to downgrade ratings for about 17 insurance companies in Florida. However, such a change in ratings has not yet been released by Demotech.

Each insurance company either receives an A – Exceptional, S – Substantial, or an M – Moderate, with many companies obtaining their ratings from Demotech. A downgrade can cause issues for policyholders, especially homeowners with a mortgage. Mortgage companies like Fannie Mae and Freddie Mac require borrowers to have home insurance from a company that boasts a good rating. 

What’s the Big Concern?

If a homeowner has home insurance from a low-rated company, it could cause issues with Fannie Mae and Freddie Mac, two of the more popular mortgage companies. The big concern is that they will begin to penalize homeowners that have home insurance policies from low-rated insurance companies. 

If homeowners receive news that their policies are no longer acceptable, it will prompt them to find new policies. Some worry that homeowners, to quickly regain coverage, will have to select undesirable insurance policies that could come with higher premiums or it could leave many homeowners in an unfavorable standing with their mortgage company.

State Leaders Have a Plan

Florida lawmakers are already jumping into action. Governor Ron DeSantis says that the state should plan to rely on Citizens Property Insurance Corporation. This is a state-run insurance company that was formed in August 2002. It was designed by the state legislature to be a resource for property owners who could not find insurance through the private market. The company already provides coverage for more than 900,000 homes.

DeSantis says that if Florida insurance companies experience a downgrade, Citizens Property Insurance would act as a backup. According to state law, Citizens are designated to act as a reinsurer. Essentially, Citizens would step in to assist insurance companies that might be struggling to pay claims due to a downgraded status.

Renewal Terms To Consider 

We also want to ensure you receive the best renewal terms available. If your carrier is affected, this will require that you have a 4-point inspection and wind mitigation inspection. 

4 Point Inspection 

A 4-point inspection covers a home’s electrical system, plumbing system, A/C & heating system, and roof system. The results of this inspection are valid for one year.

Wind Mitigation Inspection

A wind mitigation inspection looks at how your home/building will stand up against strong, hurricane-force winds. This involves looking at the structural parts of your home such as when your home was constructed and the type of roof you have. If you have had a wind mitigation inspection within the past five years, please let us know.

Again, no downgrades have been announced by Demotech. However, COBIA Insurance wanted to make sure that all of our valuable clients are equipped with accurate information from us. We are here to offer any support you may need.

COBIA: Our Promise to You

COBIA Insurance is here for you. We promise to make sure you are immediately made aware of any possible changes. Our team is working hard to make sure that any changes are minimized and that you remain with quality insurance coverage.

We are honored that our clients have trusted us since serving Brevard County in 2013. We’ve been a first-choice insurance agency for home insurance, flood insurance, auto insurance, umbrella insurance, and commercial insurance. You can find out more about our quality services by clicking here.

Frequently Asked Questions

Do you have other insurance companies?

Absolutely! Cobia has other insurance companies and we’ll make sure that you’re covered.

What does this mean?

Demotech, a financial stability ratings company, is planning to downgrade more than two dozen insurance companies of their financial stability ratings. Downgrading the Insurance companies rating could prompt mortgage lenders to not accept those policies and force homeowners to get coverage elsewhere.

How do I find out if my insurance company is one of the downgraded companies?

As of now, the list of carriers is unknown. Once the information is released, we will notify you if you are affected.

Will I be notified if this affects me?

Yes, we will reach out and let you know! 

Does this mean I no longer have insurance? 

No, this does not mean that you will no longer have insurance.

What happens if an insurance company fails?

Though this circumstance is uncommon, insurance companies have been known to fail. This can happen for several reasons, each leading to problems for policyholders.

However, you are not without protection. If an insurer goes bankrupt, your state’s guaranty association steps in. Similar to how the FDIC protects bank customers, state guaranty associations pay if your insurance company is declared insolvent and enters bankruptcy. The state may try to move your policy to more stable insurers. If unable to do so, the guaranty association will continue to fulfill the policy, though with limitations that vary by state.

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