Demotech, a ratings agency for insurance companies, is set to downgrade 17 Florida property insurers, a move that could deliver another blow to an already fragile market.
This has spurred a swift response from Chief Financial Officer Jimmy Patronis and the Florida Office of Insurance Regulation (OIR), which blasted the decisions.
The OIR describes Demotech’s actions as an “example of inconsistent, monopolistic power of a select rating agency”. The OIR calls on Demotech to perform a more comprehensive review of the proposed ratings given the potential impact.
In a letter to the leaders of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac, government-backed groups that guarantee mortgages, Patronis called Demotech a “rogue ratings agency” that is playing “havoc with the financial lives of millions of Floridians,”.
Demotech is the only agency that rates domestic Florida insurers, so Fannie Mae and Freddie Mac, which require mortgages to have minimum property insurance coverage, would not back up those mortgages.
“The purpose of this letter is to urge you to reconsider your reliance on Demotech as the primary ratings agency for rating the strength of Florida’s domestic insurance market and to give Florida lenders time to identify a suitable alternative ratings body to evaluate the financial strength of Florida insurers,” Patronis wrote.
Don’t let the insurance company or the rating agency have the last word. If you sustained property damage, immediately contact the Florida Property Damage Attorneys at Consumer Law Office (CLO). 305-940-0924.
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