TAMPA BAY, Fla. — Florida rating agency Demotech responded to the Florida Office of Insurance Regulation saying it will not be posting the expected financial stability rating downgrades Tuesday.
We learned last week that Demotech had notified about 20 insurance companies that their ratings were going to be downgraded, which would ultimately make it difficult for these companies to operate in the state. This comes after reviewing their financial re-insurance packets for the 2022 hurricane season.
Office of Insurance Regulation (OIR) Commissioner David Altmaier called out the rating agency in a letter last week, basically telling them to go back to the drawing board and reassess their ratings guidelines.
In a response letter to OIR, Demotech President Joe Petrelli wrote:
“Due to various circumstances, Demotech will not take any rating action including affirmation, downgrade, or withdrawal until further notice. While we are unable to provide a specific date for release, we are working to expedite the release of our ratings as soon as possible.”
In Monday's email from Demotech to OIR Commissioner Altmaier, Petrelli stated that he would send a more comprehensive response to him on July 26. Read that full letter below.
Several independent insurance agents in Tampa Bay have told us that the industry is in crisis waiting on these looming downgrades. One agent said "Florida may be on fire" if the state doesn't step in and change regulations that require insurance companies to have an "A" rating for agents to write policies for them.
In addition, they say there may need to be intervention at the federal level to allow homeowners with Fannie Mae and Freddie Mac loans to have insurance with less than "A" ratings. Click here to read more in-depth about what's at stake.
Frontline Insurance is one of the companies that was notified of a rating downgrade. Frontline CEO Leman Porter sent a letter to agents Monday stating that Demotech informed them that their rating would in fact not be downgraded on Tuesday.
Porter wrote, "We continue to emphasize our commitment to our customers (and you), which is only strengthened by this news. We anticipate that there will be no disruption to our Agency Partners or customers, in fact, Demotech announced today that they are “changing our deadline and actively reviewing supplemental information provided to us.” As this effort progresses, we commit to keeping you informed and we appreciate your continued trust and partnership."
In a press release Tuesday, Demotech said that OIR’s claims are inaccurate and that they have in fact been working with insurance companies to improve ratings.
The release states, “As it would be injurious and prejudicial to publish rating actions prior to the completion of our process and finalization of our opinion, Demotech will not comment on potential rating changes until our process is concluded. We will continue to follow our rating methodology and remain an independent observer despite outside pressure.
Read the full letter below: