UPC, a Florida property and casualty insurance company licensed in Texas, was ordered to end its operations by Florida state officials and the Second Judicial Circuit Court of Leon County, Florida.
UPC’s insurance policies will be canceled effective 12:01 a.m. on March 29, 2023. If you are a policyholder, this is when your policy will end unless your policy ends earlier than that day under the terms of your policy.
Skyscraper Insurance has established a committee to deal with this crisis and help every individual policyholder be replaced with strong-standing carriers. We are also here to help not just our existing Skyscarper clients but any policyholder from UPC Insurance reach out to our dedicated managing representative
Bankrupt Florida property insurer placed into receivership
Florida regulators have initiated the process to place United Property & Casualty Insurance Company (UPC) into receivership.
According to documents from Florida’s Office of Insurance Regulation (OIR), the state’s interim Insurance Commissioner Michael Yaworksy sent a letter to Chief Financial Officer Jimmy Patronis to trigger the procedure that will lead to securing court approval to place UPC into receivership. UPC had also agreed to the decision.
Last August, the St. Petersburg, FL-based UPC announced that it would exit Florida’s homeowners’ insurance market. Tampa Bay Times reported that another insurer, Slide Insurance, took on 72,000 of UPC’s policies earlier this month.
A document filed with the SEC on February 06, 2023 indicated that UPC had about 135,000 policies in Florida before Slide took over a portion of them. In another SEC filing on February 10, parent company United Insurance Holdings Corporation said that UPC was expected to be placed into receivership due to insolvency.
“United was deemed insolvent on February 6, 2023, because if all of the assets of United, if made immediately available, would be insufficient to discharge all of the liabilities of United,” OIR Property & Casualty Financial Oversight director Virginia Christy said in an affidavit attached to Yaworksy’s letter.
Christy’s affidavit also noted that UPC had net underwriting losses of over $35 million each year since 2017.
While UPC was still in business last year, industry experts saw the writing on the wall when Demotech downgraded the insurer’s rating from “A” to “M” last year. Demotech eventually withdrew UPC’s rating in late August 2022 – a sign that the Insurance Information Institute took to mean that UPC would join Florida’s growing list of insolvent property insurers.
A total of six insurers were placed into receivership in 2022 due to insolvencies.
What are your thoughts about UPC being placed into receivership? And what’s next for Florida’s property market? Let us know in the comments below.
Thousands of UPC policyholders in Florida will lose their homeowners’ insurance at the end of the month as the St. Petersburg-based carrier has become insolvent.
UPC, doing business as United Property and Casualty Insurance, will cancel its policies by March 29; however, Tampa-based insurance firm Slide has acquired the exclusive renewal rights for over 91,400 Florida homeowners insurance policies from UPC.
Slide, one of the top homeowner insurers with an A-rated financial stability score, will begin covering eligible customers immediately following the cancellation of their UPC policies.
“It will be a seamless process for policyholders if Slide assumes their policy. There will not be any premium changes until the policy is renewed,” said Mark Friedlander, Insurance Information Institute (Triple-i) director of corporate communications.
Slide will continue to provide coverage through the expiration of the policyholder’s current policy term. If someone has already paid their premium no action is required, according to Slide, which has created a landing page for UPC policyholders, answering their questions.
While Slide is navigating the transferring process, other questions loom regarding previously filed claims and policies not covered/assumed by Slide.
“The big issue will be what happens with the roughly 20,000 outstanding claims related to hurricane damages. We know those filed before Feb. 1 will be taken over by FIGA [Florida Insurance Guaranty Association]. Slide will not be responsible for assuming those claims,” Friedlander said.
FIGA manages pending claims by or against Florida policyholders of insurance companies that become insolvent or liquidated.
Meanwhile, the remaining 53,000 UPC policyholders have received 30-day notices to find a new insurer.
“When we first heard about UPC’s plan to do an orderly runoff, it didn’t seem feasible to us and now they have been declared insolvent. We forewarned policyholders to not wait until they receive a letter to find a new insurer,” he said about the ominous writing on the wall.
UPC is the seventh insurance company to exit Florida in 2022, continuing the trend of instability in the market.
As of this year, the Office of Insurance Regulation has put 23 other unstable insurers on its “watch list.”
“The market was in such turmoil before regulations were passed. There’s no immediate fix. It’s going to take time for the market to stabilize, and we will have to suffer until then,” Friedlander said, explaining litigation issues on top of Florida’s numerous natural disasters have caused insurers to hike rates.
The average home insurance cost in Florida is $4,218, which is nearly $1,441 more than the national average of $2,777, according to Insurance.com.
Friedlander said most of the affected UPC customers, predominantly in the Tampa and South Florida markets, will likely seek coverage from the state-backed Citizens Property Insurance Corp. The taxpayer-subsidized insurer will require a completely new policy, and by comparison will be less costly than a private insurer.
Citizens is projecting to reach 1.7 million policies by year’s end, as it added nearly 30,000 new customers per month – a new record for the insurer.
As Florida continues to be considered a high-risk market for insurers, there’s a greater need for competition, especially as 15% of homeowners are uninsured, according to Triple-i.
“A lot of retirees are on fixed incomes and paid for their homes in cash; thereby, they are not required to have a mortgage,” Friedlander said. “After Hurricane Irma, a lot of homeowners exited insurance plans, even those who have seven-figure-priced homes decided to self-insure.”
Although flood insurance only requires people to have flood insurance on property inside a flood zone, storm surges are still common, and FEMA (the Federal Emergency Management Agency) is not an insurance replacement, or as Friedland puts it, “they are not cutting you a check to replace your home.”
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