The Advocate reported that the OIR moved to shutter FedNat on September 23. The regulator gave clarification that its referral of FedNat to receivership wouldn’t have an effect on Florida policyholders.
“It’s essential to notice, FedNat had zero insurance policies in power in Florida on the time of the referral. In June 2022, FedNat early canceled roughly 56,000 of the 140,000 insurance policies in power in Florida,” an OIR spokesperson mentioned.
“The remaining insurance policies had been assumed by Monarch Nationwide Insurance coverage Firm. All excellent claims will grow to be the duty of FIGA (Florida Insurance coverage Warranty Affiliation).”
In Might, the insurer filed a discover to withdraw from Louisiana, permitting it to cancel its then 13,500 insurance policies within the state. FedNat mentioned on the time that it had sufficient cash to pay any excellent claims. However earlier this month, FedNat advised the OIR that it had “overstated” its monetary place, and that it didn’t have ample funds to pay its money owed and different obligations, courtroom paperwork revealed.
It was additionally reported by The Advocate that FedNat’s admission got here after a merger final month with Louisiana’s Maison Insurance coverage, which was already owned by the identical dad or mum firm.
Louisiana Insurance coverage Commissioner Jim Donelon is wanting into the potential impression of FedNat being positioned into receivership.
“I’m reaching out to Florida to get a clearer understanding of this improvement from a Louisiana standpoint,” Donelon mentioned in a press release to Fox 8. “My preliminary understanding is that it’ll haven’t any impact on any Louisiana policyholder, however could have LIGA implications relative to claims pending on the time of Florida’s motion.”
Learn extra: Three property insurers see their rankings downgraded, withdrawn
FedNat’s referral to receivership comes a month after its monetary stability score by Demotech was withdrawn. It has been mentioned that rankings withdrawals sometimes preceded an organization’s insolvency or rehabilitation.