Homeowners insurance Florida companies are actually healthier than some ratings companies would have you believe. According to Weiss Ratings, only state-operated insurer Citizens and San Antonio-based USAA, a company which specializes in insuring military families, rate an A for financial strength. Mind you, USAA only sells Citizens policies in Florida. Their own branded policies are not even available. No other Florida-based insurer received a recommended rating from Weiss (meaning a grade of B+ or higher). However, many in the Florida insurance industry question this assessment. According to them, Weiss may be overemphasizing factors like money on-hand to settle claims and profitability while underemphasizing reinsurance or the coverage taken out from offshore companies to cover claims in case another natural disaster hits the state.
Homeowners Insurance Florida Companies are Thriving
According to ratings firm Demotech, the Florida property insurance industry is enjoying a wave of good fortune as it entered the 2013 hurricane season which began in June. This was made on the basis of higher revenues due to rate increases, decreased expenses resulting from fewer claims as it has been seven years since a hurricane last struck Florida, and lower corporate expenses for hedging against hurricane risk.
Demotech reported that 70% of the state-based homeowners insurance Florida companies it monitors reported underwriting profits, which is just one of multiple profit sources these companies enjoy. In addition, the top 20 private-sector Florida insurers that jointly account for some 50% of the policies sold in the state, boosted their reserves by 25% in 2012, compared with just 5% in 2011. This puts them in a better position to settle claims if a major storm should hit the state this year, not to mention the capital coverage they have with their reinsurance policies.
However, other analysts have pointed out that some half of the increase of surplus in 2012 was accounted for by just two homeowners insurance Florida companies, with Citizens reporting reserves of $6.3 billion, three times more than the total reserves of the top 20 private Florida insurers. Still, the overall increase in surplus levels could mean good news for policy holders since it could signal lower rate increases in the future.
Reinsurance is Insurance Florida Homeowners Companies Take Out to Cover Claims
The smaller companies that dominate the Florida property insurance landscape rely on reinsurance to be able to cover claims. However, reinsurance costs are expensive, accounting for some 40% to 50% of premiums. With a buildup of surplus, homeowners insurance Florida companies could buy less reinsurance, which would result in less pressure to raise rates when reinsurance costs spike.
In the long run, this could benefit consumers by lowering rates. So it might be a good time for those in the market for homeowner’s insurance to approach insurance agents to help them request for the best quotes from these insurance companies. FLHomeownerinsurance.com is aligned with 37 A rated companies by Demotech. Get your quote today by phone at 352-200-2066 or online…
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