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The Florida Office Of Insurance Regulation (OIR) is taking emergency motion because the state waits on the potential downgrade of a number of companies’ monetary stability scores from Demotech.
OIR introduced Wednesday that it’s establishing a temporary reinsurance association with the state-backed Citizens Property Insurance Corps to financially again any firm that’s score is downgraded.
RELATED: Demotech postpones Florida insurance companies’ score downgrades
In the state of Florida, these scores are necessary for brokers to have the ability to write insurance policies for the corporate and for federal mortgage loans equivalent to Freddie Mac and Fannie Mae.
According to the mortgage suppliers, an insurance company rated by Demotech will need to have an “A” score to obtain a mortgage from them.
OIR Commissioner David Altmaier stated in a press release, “In the event we need to implement this temporary solution, consumers will not need to seek coverage elsewhere, agents will not need to move policies, and lenders can have confidence that these insurers continue to meet the mortgage qualifications.”
Reinsurance is actually insurance that an insurance firm will get to again them up if there’s a vital storm and several other owners want repairs.
The launch explains, “Fannie Mae and Freddie Mac each offer an exception to the financial rating requirements for an insurer that is covered by a reinsurer who assumes, by endorsement, 100 percent of the insurer’s liability for any covered loss payable, but unpaid by the insurer, by reason of insolvency. In the event that a participating insurer is declared insolvent, the Florida Insurance Guaranty Association shall carry out its statutory duties under Part II of Chapter 631, Florida Statutes, and pay claims as set forth in the statute.”
It was not instantly made clear the place precisely this reinsurance funding is coming from. We have requested for additional rationalization from the Office Of Insurance Regulation.
To learn the complete launch, click here.
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