TALLAHASSEE, Fla. – Nearly 80,000 Florida homeowners will have to find new insurance, after Southern Fidelity declared bankruptcy. The Tallahassee based company is the fourth insurer to declare insolvency since February.
Southern Fidelity’s bankruptcy filing is concerning because, according to insurance agents, a large portion of those dropped customers will likely have to reinsure their homes using Citizens Property Insurance -- the state-owned property insurance company. Insurance agents say Citizens has ballooned as a private company, and just one hurricane could detrimentally affect homeowners across the state.
Southern Fidelity’s shutdown comes less than a month after state lawmakers held a special session to stabilize what’s been described as an industry in crisis. The company announced in early June, that it won’t be able to purchase reinsurance in time for the 2022 Hurricane season.
According to state insurance records: Lighthouse Property Insurance Corporation, Avatar Property and Casualty Insurance and St. Johns Insurance Company shut their doors over the past four months. Local insurance owner and agent, Sean Way, tells News4JAX, finding some of these homeowners affordable new policies can be challenging.
“Especially for those that are on fixed incomes, they have now retired,” Way said. “And they may have been with the company for years and it’s just been an automatic process -- now to find themselves in that position is very tough, frightening, especially with this being the beginning of hurricane season.”
Way and other local insurance agents say they are concerned that the state-owned property insurance company Citizens is being overloaded with policies from homeowners who were recently dropped. He says Citizens was designed to be an insurance carrier of last resort and wasn’t created to compete with other carriers like it’s doing today. New numbers from May reveal that Citizens has more than 883,000 policies -- up from more than 463,000 policies just two years earlier.
″So what happens the more policies we place with Citizens -- think of it this way, it’s owned by the state, it’s owned by all of us.” Way said.
Way says Florida’s special session was a good start at tackling rampant insurance litigation and fraud. The new legislation lawmakers agreed on also gives insurance companies more financial backing to insure themselves, but Way says one hurricane could unravel any progress Florida has made.
“If we get hit by a hurricane and we gave Citizens as the largest carrier, then it’s going to be, this crisis that we’re in, is going to be prolonged,” Way said.
Insurance agents we spoke with about this story say there are some ways to avoid being dropped -- keep your roof updated and in good shape, repair any minor damage as it happens -- and if you’re worried about being cancelled, consider wind protection measures. Purchase hurricane straps for your roof or talk to a contractor about roof bracing measures.