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'Stuck with the bill': How Florida insurance companies going under leaves buyers out to dry

ORLANDO, Fla. —
When Mike McKee’s insurance company canceled his policy in 2021, he paid thousands of dollars to install a metal roof on his house near downtown.

“One, it would last longer. Two, it'll last longer. Three, it'll last longer,” McKee said.

However, he didn’t end up saving as much money as he first thought he would.

“Insurance companies that I had were still going to charge three times as much as I had paid two years ago, so about $3,000 a month,” McKee said.

He ended up securing coverage with Citizens, typically the last resort when homeowners can’t find insurance in the private marketplace.

Not only are home insurance options limited or pricey because of fewer insurers are operating in Florida compared to even a few years ago — for a variety of reasons, like reinsurance or roof replacement costs — but all policyholders across the state are now bracing to pay more to cover insurers that were forced into liquidation.

The Florida Insurance Guarantee Association is a nonprofit entity that handles payment for claims from liquidated or insolvent property insurance companies.

The association has an assessment for other insurance companies operating in the state of Florida, which would then pass that cost on to their policyholders across the state.

“Every single property owner in the state is going to pay for failed insurers with a special assessment that will be tacked on to their next home insurance renewal bill,” said Mark Friedlander a director with the Insurance Information Institute.

State regulators just approved the most recent assessment in March.

“I feel deeply for the people who lose the insurance, and I know there has to be a solution, but it seems like at every step, what's happening is the individual homeowners are being punished for the ills of the insurance companies and lack of action from state legislature,” McKee said.

Barry Grimm is a homeowner in Apopka who’s also frustrated about the added expense after going through previous premium rate hikes with his insurance company last year.

"Of course, we don't like to pay more money. I think it comes down to better management and control of the frivolous claims that are being made,” Grimm said.

So far this year, Lighthouse Property Insurance Corporation, Avatar Property Insurance and St. John’s Insurance Company were ordered into liquidation, according to FIGA reports.

The liquidation of these companies forced their policyholders to find new insurance coverage in Florida’s already complicated market.

Since 2017, WESH 2 Investigates found out that the following nine insurance companies were forced into liquidation or receivership in Florida:

Global Liberty Insurance Company of NY

Western General Insurance Company

Gulfstream Property and Casualty Insurance

American Capital Assurance Corporation

Bedivere Insurance Company

Windhaven National Insurance Company

Windhaven Insurance Company

Florida Specialty Insurance Company

Castle Point National Insurance Company

Ohio-based firm, Demotech, has been monitoring the financial health of insurance companies in Florida for decades. President Joe Petrelli told WESH 2 Investigates that it’s possible other companies could go into liquidation.

“I think there is some concern if there's not significant and meaningful legislative reform,” Petrelli said.

State lawmakers will meet in Tallahassee on May 23 for a special session to tackle some of the issues plaguing Florida's home insurance industry. Industry analysts had previously cited concerns like roof replacement schemes, attorney fees and reinsurance.

Even when lawmakers work out a deal, industry analysts say it could be a while before Florida homeowners see relief.

“It’s typically an 18 to 24-month cycle before we start to see significant impacts,” Friedlander said.

Until then, you can check the financial stability of your insurance company by asking your agent, and also ask them to shop for the best coverage for your home.

If you have a tip you'd like our investigative team to look into email investigates@wesh.com.