Florida homeowners can expect to see another spike in their insurance premiums as more insurers fail or leave the state.
The Florida Insurance Guaranty Association (FIGA), which handles claims when insurance companies go insolvent, voted on March 31 to ask state regulators to collect a 1% emergency “assessment” to help cover claims from insurance companies that may or have become insolvent.
“The emergency assessment is necessary to secure funds for the payment of covered claims, to pay the reasonable costs to administer such claims, including claims resulting from insurance companies that have become insolvent or may become insolvent as a result of losses incurred due to hurricanes including but not limited to Hurricanes Irma, Michael and Ian, and to secure bonds issued to generate revenues to pay claims,” FIGA’s Executive Director Corey Neal wrote in a letter to Insurance Commissioner Mike Yaworsky in April.
On April 10, Yaworsky issued an order, approving the request.
To help offset the deficit, FIGA plans to borrow $150 million, then issue up to $750 million in Insurance Assessment Revenue Bonds to pay off its debt and cover the remaining claims.
Starting in October, insurers will collect the assessments from policyholders and send the money to FIGA “until the end of the assessment year in which all of the bonds have been paid in full and are no longer outstanding.”
The assessment comes as Florida continues to grapple with a property insurance crisis that’s been raising premiums and putting companies out of business.
Seven insurers have gone insolvent since last year, according to the Florida Department of Financial Services, and premiums have gone through the roof with industry experts warning they could jump 20 to 25% by June.