Florida has taken action to back up property insurance companies facing a downgraded rating in an effort to help thousands of homeowners comply with mortgage requirements rather than being forced to seek new policies.
The state-created Citizens Property Insurance Corp. will provide reinsurance for 17 companies that the rating company Demotech has said will be downgraded, the Office of Insurance Regulation announced Wednesday.
That means Citizens, which was created to provide insurance for property owners who can’t find policies through private companies, will guarantee the companies will be able to pay out claims. Otherwise, homeowners with mortgages from Fannie Mae and Freddie Mac would have had to seek new policies.
“Because of the uncertainty with the status of Demotech’s ratings, we’ve been forced to take extraordinary steps to protect millions of consumers,” Insurance Commissioner David Altmaier said in a news release. “In the event we need to implement this temporary solution, consumers will not need to seek coverage elsewhere, agents will not need to move policies, and lenders can have confidence that these insurers continue to meet the mortgage qualifications.”