Florida OIR Wants Longer Notice on UPC’s Policy Cancellations for Runoff

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United Property & Casualty Insurance coverage Co., now within the midst of an orderly run-off after years of heavy losses, had deliberate on giving 60 days cancellation discover to insurance policies nonetheless in drive as of Could 31, 2023. However Florida regulators are actually requiring 120 days’ discover.

“It’s good to see that policyholders can be given 120 days discover and it’s good for brokers to have extra time on that,” mentioned Kyle Ulrich, president of the Florida Affiliation of Insurance coverage Brokers.

Florida Insurance coverage Commissioner David Altmaier this week signed off on a consent order, revising UPC’s runoff plan and tightening oversight of the troubled firm. UPC introduced in August that it was pulling out of a number of states, together with its residence state of Florida, and would non-renew most of its insurance policies.

The Florida Workplace of Insurance coverage Regulation consent order famous that as of Nov. 1, UPC had about 142,785 insurance policies in drive in Florida, and would nonetheless have some 70,287 in drive on Could 31. The service’s runoff plan, submitted in mid-November, mentioned it will give two months’ discover to these remaining policyholders.

However two months’ discover, whereas greater than statutorily required, shouldn’t be sufficient, Altmaier’s workplace mentioned.

“As a situation of approval for the early cancellation of its insurance policies in Florida that won’t have been nonrenewed previous to June 1, 2023, United should present affected policyholders in Florida with at the least 120 days’ discover of cancellation, as an alternative of the 60 days discover contemplated” within the firm’s proposed plan, the order reads.

UPC additionally should submit its cancellation notices, policyholder notices and agent notices to the OIR for approval.

United additionally reported in its preliminary plan {that a} subset of insurance policies up for renewal in November and December weren’t despatched correct notices of renewal. The service proposed to now ship the notices, then shortly cancel the insurance policies, with 60 days’ discover. However OIR mentioned that the plan would create confusion and client hurt. It ordered UPC to increase protection for these insurance policies for 120 days, then non-renew them.

“That’s good. Possibly by then, the market can be in higher form and insurance policies could be positioned extra simply with different carriers,” Ulrich mentioned.

Officers with United and its publicly traded holding firm have often not responded to interview requests about its monetary state of affairs.

The OIR order notes that UPC should keep workers to reply to policyholders, should submit its customer support script to OIR for approval, and its brokers should help in inserting insurance policies with different carriers. All unearned premiums must be returned to policyholders by June 1, 2023.

The consent order additionally sheds new gentle on the monetary troubles and restructuring efforts that United has been by means of within the final 18 months:

  • UPC noticed a giant decline in underwriting outcomes, with losses exceeding $35 million in every of the final 5 years. It reported a internet underwriting lack of virtually $170 million within the third quarter of 2022. The excess as of Q3 was $57 million, an enormous drop from the 2021 reported policyholder surplus of $169 million, the order notes.
  • The corporate introduced late final yr that it will cease writing new house owner insurance policies in Florida. It took different steps to regain its footing, together with consolidating 4 sister corporations into two. Regardless of these strikes, underwriting losses continued.
  • In July, the Demotech monetary ranking agency downgraded UPC considerably. With no favorable ranking, UPC policyholders with mortgages might have been pressured to seek out new HO insurance coverage or be force-placed into dearer insurance policies. To get round that, Florida officers mentioned in July that they’d discovered an exception to the Fannie Mae and Freddie Mac secondary mortgage lender guidelines: If an insurer can present that each one claims can be paid in case of insolvency, a monetary ranking shouldn’t be required. The state-created Residents Property Insurance coverage Corp. would function the backstop, using a kind of reinsurance association often called a cut-through endorsement.
  • UPC was one of many few carriers to join that Momentary Market Stabilization Association. However the association is just short-term, OIR mentioned.

“United has been unable to safe reinsurance commitments for the 2023 hurricane season,” the consent order explains. “The corporate has no ranking acceptable to the secondary mortgage market, and the Momentary Market Stabilization Association terminates on Could 31, 2023.”

The corporate now plans to scale back the charges paid to its managing normal company, one thing the OIR permitted, with the stipulation that the funds be made weekly. UPC additionally plans to change how its reinsurance tower is allotted between it and its sister firm, American Coastal Insurance coverage Co.

United mentioned in its preliminary plan that the runoff would doubtless final past the top of 2024.

“The plan signifies that the corporate intends to handle and fund its losses and loss adjustment bills in 2024 and subsequent years by means of reinsurance recoveries, capital from the mother or father or different sources which the corporate tasks will present adequate liquidity to handle the runoff,” the plan famous.


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