In a written explanation submitted to Chief Financial Officer Alex Sink, Florida Insurance Commissioner Kevin McCarty revealed some of the risky strategies that his team is using to keep housing insurance prices low and keep insurance firms that are in trouble from going under.
Among the techniques used by McCarty and his team is allowing an insurance firm facing bankruptcy to write policies despite its situation without giving warning to homeowners. Another is letting insurers drop unwanted clients and putting an end to requirements that would have ensured that insurance companies will have the means to cover hurricane impacts. McCarty’s office has earlier told insurance businesses that they are not required to have resources to pay for the long-standing requirement of a 1-in-100-year storm anymore.
According to McCarty, the aim behind these regulation changes is to cut down on insurance costs and prevent private insurance companies from going under while the state’s housing market is in a fragile condition. The Commissioner revealed these details following Sink’s query about a fundamental change in housing insurance regulation in the area.
The query was issued by Sink following an investigative series by the Herald-Tribune which showed that a number of property insurance firms in the state are showing signs of being financially unstable. The investigation also revealed that state regulators are allowing troubled insurance firms to continue to write policies without providing ample warning to homeowners.
Under state law, it would be a felony for troubled insurance firms to sell coverage, unless they receive the expressed permission of the insurance commissioner. McCarty has defended his office’s actions by claiming that canceling policies would result in the deterioration of the business book and would render the sale of an insurance firm impractical.
The Herald-Tribune investigation has claimed that there are at least three insurance firms that had been allowed by the commissioner’s office to continue renewing policies despite facing business failure. Among these housing insurance companies were Northern Capital, Edison and American Keystone, with the last two eventually failing or ended up getting sold.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.