Florida Agency Borrows $150 Million for Insurance Claims

In yet another lousy week for the Florida property insurance market, an agency set up by the state that is designed to handle claims once an insurance company is insolvent, approved a plan to borrow $150 million, putting policyholders around the state on the hook for paying back the loan.

The Florida Insurance Guaranty Association recently made the decision to take out the loan after five property insurance companies in the state have gone insolvent since February. 

The agency is also known as FIGA and was set up by the state as a non-profit to step in and deal with claims once an insurer has been declared insolvent. FIGA is also authorized to issue “assessments” to policyholders to help cover costs related to the insurer failure. 

FIGA has already issued a couple of assessments. They have put a 1.3 percent assessment in place which is related to the failure of St. Johns Insurance Co which happened back in March. They are also putting a 0.7 percent assessment in place that will extend through 2023 to help finance the $150 million loan they recently put in place. 

“We realize this is the Florida policyholders’ money we are spending, and we don’t take that lightly,” Corey Neal, executive director of FIGA, said during a recent board meeting.

Neal explained that the loan will mainly be used to help cover claims of Southern Fidelity Insurance Co., which was placed into receivership in June.

A number of other property insurance companies have gone under in recent months including: 

• Weston Property and Casualty Insurance Co.
• Lighthouse Property Insurance Corp.
• Avatar Property & Casualty Insurance Co. 
• St. Johns Insurance Co.