Florida property insurers are preparing for another assessment on premiums to help the Florida Insurance Guaranty Association fund outstanding claims from an insolvent insurer.
The 1% emergency assessment on all premium for new and renewing policies, approved this month by the state insurance commissioner, will be the fourth surcharge needed for FIGA in the last two years. It will kick in Oct. 1 and will continue at least until Sept. 30, 2024. The revenue must be forwarded to FIGA on a quarterly basis, the OIR said in its April 10 order.
The charge is needed to issue $150 million in bonds that will help pay thousands of hurricane claims left after the liquidation of United Property & Casualty Insurance Co., which was deemed insolvent in February. Later, FIGA will “use its best efforts” to issue revenue bonds of as much as $750 million to cover its outstanding liabilities, the order explains.
The FIGA Board of Directors approved the request at its March 31 meeting.
“Upon the issuance of the emergency assessment levy, FIGA will notify all member insurers and provide a copy of the Notice of Rights, along with instructions for payment remittances and reconciliations,” FIGA Executive Director Corey Neal wrote in his April 4 letter to Insurance Commissioner Michael Yaworsky.
The charge follows assessments of 0.7%, 1.3%, and 0.7% as the Florida market has seen 10 property insurer insolvencies in the last two years.
The assessment, which will likely be passed on to policyholders, may amount to roughly an additional $30 per policyholder, per year. But for insurers it can be a significant amount of cash. For mid-size Olympus Insurance, for example, 1% of total written premium could be more than $3 million. For Citizens Property Insurance Corp., the largest insurer in the state, the assessment could be as much as $32 million, according to the latest quarterly financial report from OIR.
And as one former insurance executive once put it, insurance companies don’t necessarily have millions of dollars “just lying around,” ready to be scooped up and paid to FIGA.
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