NewsPrice of Paradise


Demotech withdraws 2 more Florida insurance company ratings

Florida's rating agency has now withdrawn 4 ratings, downgraded 3
PoP insurance average.png
Posted at 4:09 PM, Aug 03, 2022
and last updated 2022-08-03 16:09:47-04

TAMPA BAY, Fla. — Two more Florida property insurance companies lost their financial stability ratings from Demotech Wednesday.

The state's rating agency, Demotech, withdrew ratings from Bankers Specialty Insurance And First Community Insurance, both of which are under the umbrella company of Bankers Insurance Group based in St Petersburg.

They closed new business in June and announced last week that they were pulling out of the Florida homeowners insurance market altogether, stating in a press release:

“Recent legislative measures, unfortunately, failed to adequately address the immediate financial challenges faced by property and casualty insurers, including combating fraud and litigation which exponentially outpaces every other state.”

An NR or ‘no rating’ from Demotech is often bad news for a company.

“The point of a rating is to show financial stability that you are a solid company that can pay your claims and with no rating, a company cannot show that, that's just not possible. So in most cases when we see a rating withdrawn, that is the first step towards insolvency,” explained Mark Friedlander, spokesperson for the Insurance Information Institute.

This comes after two other companies lost their ratings on August 1 and three others were downgraded.

RELATED: Demotech downgrades 1, withdraws 2 Florida property insurance ratings so far

The agency withdrew ratings for Weston Property Insurance, which previously had an "A" and FedNat, which had previously been downgraded in April from an "A" to an “S” substantial.

Demotech downgraded United Property & Casualty Insurance (UPC) from an “A” meaning exceptional, to an “M” meaning moderate.

The agency also downgraded Florida Family Insurance Company from an Aʹ (A Prime) to A and Florida Family Home Insurance Company from an Aʹ (A Prime) to A. However, these specific downgrades will not affect the company's operations in the state since they are still A's.

A financial stability rating (FSR) is a registered certification mark of Demotech and is determined by “a company’s ability to survive a downturn in economic conditions as well as a downturn in the underwriting cycle and meet its policyholder obligations in any event,” according to the Demotech website.

OIR informed us Tuesday evening that UPC was the first to opt-in and qualify for the reinsurance backup funding. The office also established a new webpage with information.

As Tampa Bay continues to attract new residents and businesses, the impact of living in paradise comes at a cost for all of us— from the increasing cost of housing and infrastructure to utilities and insurance. ABC Action News is committed to helping you and your family make the most of your money and navigate through the Price of Paradise.