Even as the hurricane season winds to a close, ratings agencies are sounding the clarion that some of the state's top property insurers may be at risk of not meeting their obligations if a big storm strikes.
Blame the credit crunch and trickle down from problems with the Florida Hurricane Catastrophe Fund.
Staffers with the Cat Fund in mid October warned that the global financial crisis has curtailed their access to borrowing $10-billion to $15-billion if a hurricane strikes.
The fund was set up to reimburse private insurers, which by law must buy reinsurance from the state's catastrophe fund and pass on their savings to customers. However, if the fund can't meet its obligations, that means it wouldn't necessarily be able to make payouts to those insurers.
As a result, ratings agency A.M. Best Co. decided to place seven insurers active in covering windstorm risk in Florida "under review with negative implications." In other words, the credit ratings of the insurers remain at risk for the remainder of the hurricane season.
Placed under review are Allstate Floridian Insurance Group, Argus Fire & Casualty Insurance Co., Omega Insurance Co., Safeway Property Insurance Co., Tower Hill Preferred Insurance Co., Tower Hill Prime Insurance Co. and United Automobile Insurance Group.
Jeff Harrington can be reached at harrington@sptimes.com or (727) 893-8242.
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