On May 12, 2020, a Consent Order was entered In the Matter of: Capitol Preferred Insurance Company, Inc. by the Florida Office of Insurance Regulation. Capitol Preferred had requested relief from the Florida Office of Insurance Regulation “for approval to cancel approximately 27,500 policies with 45 days’ notice.” Typically, an insurance company is required to provide at least 90 days’ notice before cancelling a homeowner’s insurance policy. Florida Statute 627.4133(2)(b)(6) provides an extraordinary remedy reserved to address insurers which are or may be in hazardous financial condition without cancellation of some or all of its policies. This is intended to protect the remaining policy holders.
According to the Consent Order, as of May 3, 2020, Capitol Preferred had approximately 108,870 policies in force in Florida providing homeowner’s insurance coverage. Capitol Preferred reported net losses in the millions for the years 2017, 2018 and 2019. According to an article by Insurance Journal, “The company’s financial issues were made public late last year when it sought a 47% rate increase from regulators on one of its 14 books of business. It later amended the requested increase to 36.5%.” In light of this, Capitol Preferred was facing steep increases in its reinsurance premiums for the upcoming Atlantic Hurricane Season, which forecasters believe will be busy.
The Florida Office of Insurance Regulation approved the cancellation of approximately 23,800 policies with 45 days’ notice. This block of policies represents the policies acquired by Capitol Preferred in a merger with Southern Fidelity Property & Casualty, Inc. from which the bulk of Capitol Preferred’s losses stem from. This saves approximately 4,000 policy holders from having their homeowner’s policies cancelled. The notices of cancellation must be approved by FLOIR and will provide 45 days’ notice.
If you are currently insured with Capitol Preferred Insurance Company and have questions about how this Order affects you, then call Jason directly at (561)571-7898 or email him at Jason@JasonHelps.com.
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