7 Florida insurers didn’t pass the catastrophe stress test

Seven Florida insurers failed the state’s catastrophe stress test, more than double the number from the previous year.
Florida law prevents the Office of Insurance Regulation from disclosing the names of the potentially distressed insurers.
Critics argue this lack of transparency prevents consumers from making informed decisions and protects weak companies.
Homeowners are left wondering about the financial stability of their insurers, especially after recent market instability.

With an increasing number of the property insurers flagged for insufficient funds after the state’s fiscal fitness test, the call has gone out for the state to reveal more about those insurers marked for monitoring — starting with their names.

The state’s open records law says that a list of insurers under state observation for financial soundness or solvency is not available to the public and exempt from disclosure to anyone who wants to see it.

Still, seven insurers, more than double the number from last year, did not come out of the catastrophe stress test with the required minimum required funds, according to the latest Property Insurance Stability Report published in January.

State regulators say that exemptions to the state public records law prevent them from revealing not only the names, but also other identifying characteristics, such as how long the flagged companies have been in the Florida market.

The 2024 test, reported in January, modeled the losses of previous storms to see how companies could weather catastrophic losses with the reserve funds they had in place. Those insurers who failed to have the required funds after the test had to explain how they would address the shortfall, such as one which said a parent company had funds available.

When Nancy Monti heard that seven insurers did not come through the test with the minimum required funds, the Sarasota resident immediately wondered whether hers was one of them. She didn’t know much about the state of her previous insurer she’d had for more than a decade, United Property & Casualty Insurance Company, until it was liquidated in 2023, as much of the state’s insurance market teetered on the brink of disaster.

“We’ve been with our current company for two years,” she said.

Florida policyholders shouldn’t have to wonder whether their insurer is a few storms away from getting wiped out, said Martin Weiss, founder of Weiss Ratings, a Palm Beach Gardens ratings agency. The state is doing a disservice to the entire market by keeping consumers in the dark about insurers’ financials, he said.

“They make it far more difficult for consumers to be empowered with the facts, vote with their dollars, reward the strongest companies and support a more robust marketplace,” Wiess said. “At the same time, they effectively provide cover for the weakest companies to continue luring unsuspecting consumers into high-risk insurance that’s more likely to be delayed, get denied, or even fail entirely.”

Three key facts about insurers should be available to homeowners at the point of sale, Weiss said. Potential policyholders should know an insurer’s history of closing claims without payment, what fees it’s paying to affiliate companies and information like the kind revealed in the state’s catastrophe stress test, which is an objective analysis of an insurer’s risk of failure.

Fortunately, Monti has never had an insurance claim, and the two pieces of facia blown away from over her garage were the only storm damage her home endured during the last string of hurricanes that were concentrated on the Gulf Coast side of the state.

She feels the need to stay vigilant, though.

“I like to be proactive when it comes to this,” said Monti, who lives about 4.5 miles from the Gulf Coast.

Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at [email protected]. Help support our journalism. Subscribe today

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