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Patronis warns of ‘monetary chaos’ if property insurers are downgraded – Orlando Sentinel


TALLAHASSEE — Florida regulators scrambled Thursday after they mentioned a financial-ratings company notified about 17 property-insurance firms of potential scores downgrades.

Insurance coverage Commissioner David Altmaier and state Chief Monetary Officer Jimmy Patronis questioned the scores company, Demotech Inc., and warned that such widespread downgrades might have an effect on owners throughout the state.

Property insurers are required to have sufficient monetary scores for mortgage loans bought by Fannie Mae and Freddie Mac. In letters Thursday to leaders of the mortgage-finance giants and the director of the Federal Housing Finance Company, Patronis criticized Demotech and the chance that downgrades would result in insurers not assembly the scores necessities and, because of this, creating issues for policyholders’ mortgages.

“If (Fannie Mae and Freddie Mac) de-authorized a large proportion of Florida’s insurers based mostly on the doubtful scores of 1 firm, it could create monetary chaos for thousands and thousands of Floridians,” Patronis wrote.

The state Workplace of Insurance coverage Regulation on Thursday launched Patronis’ letters and a letter that Altmaier wrote to Demotech President Joseph Petrelli. The paperwork didn’t identify insurers that would face downgrades, with Altmaier saying “roughly 17″ might be affected.

Downgrades would add to already-severe issues within the state’s property-insurance market, as many carriers have dropped clients and sought main price will increase due to monetary losses. 4 property insurers have been declared bancrupt since late February, and 1000’s of insurance policies per week pour into the state-backed Residents Property Insurance coverage Corp.

Gov. Ron DeSantis known as a particular legislative session in Could to attempt to assist stem the issues. Whereas lawmakers made a collection of modifications, they acknowledged that the market wouldn’t be fastened rapidly.

In a June 30 information launch, Demotech mentioned it was persevering with to “overview, analyze, and consider Q1 (first quarter) 2022 working outcomes, disaster reinsurance applications, catastrophe restoration plans, disaster response plans, the laws rising from the particular session on the finish of Could 2022, and different issues. These components, and others, affect Demotech’s quarterly evaluation of monetary stability scores assigned to carriers writing residential property insurance coverage in Florida.”

However in a three-page letter Thursday to Petrelli, Altmaier raised questions on points reminiscent of Demotech’s scores methodology.

“Given the potential impression of Demotech’s monetary scores, OIR (the Workplace of Insurance coverage Regulation) believes Demotech ought to carry out a extra complete overview, utilizing constant requirements, of the proposed scores previous to their efficient date,” Altmaier wrote. “Moreover, within the curiosity of stabilizing the personal market and making certain firms have all obligatory data to take applicable corrective motion, we strongly encourage Demotech to obviously talk its score requirements and methodology prior to those scores turning into efficient.”



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