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Financial stability of property and casualty insurer?
Old 11-09-2008, 11:11 AM   #1
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Financial stability of property and casualty insurer?

I live in west-central Florida. My homeowner's insurance policy is currently with Citizens, the state-sponsored insurance company. I just got a letter saying that a company called Homeowners Choice (headquartered in Clearwater, FL) will assume my policy unless I opt out.

Their web site says they were founded in 2006, currently have 20,000 policies in Florida, and are approved to try and acquire 95,000 policies from Citizens.

The site also says a company called Demotech gives them a financial stability rating of "A" (exceptional).

How do I find out if Homeowners Choice could really pay in the event of a big loss (e.g. hurricane)? Is there one best actuarial/financial analysis firm to look to for a rating on Homeowners Choice? Anybody heard of Demotech?

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Old 11-09-2008, 01:51 PM   #2
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First thing -- contact your state insurance commissioner. They can help with the details. The insurance commissioner reviews the finances of all domestic and foreign (home offices outside your state) companies annually. They can tell you if they believe they are in good financial shape.

I googled Demotech - they are an actuarial firm who uses a proprietary model to rate insurance companies financial performance.

So, I'd call the insurance commissioner and it wouldn't hurt to contact your Florida legislator to ask what she/he knows.

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Old 11-09-2008, 02:15 PM   #3
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Based on a very cursory look at the company's prospetus, they look like they are in OK shape at the moment. The problem is that they are a small company with a limited capital base and very dependent on reinsurance to avoid blowing up in a bad hurricane season. Their reinsurance is mostly from the Florida Hurricane Cat Fund, which is itself (IMO) on shaky ground. So your choice is Citizens (shaky) or Homeowners Choice (OK, but vulnerable). I guess I would probably try my luck with Homeowners Choice, but recognize that you do not have the same protection you would if you were with a State Farm, Allsate, etc. But that IMO goes for Citizens, too.
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Old 11-09-2008, 02:18 PM   #4
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management has worked in the Florida homeowner insurance business for over 25 years
I would be suspect of vague statements like this from their web site. This could mean that they have 10 management folks who have worked in the business for 2.5 years each or that they have one guy with 25 years experience and a bunch of trainees that will try to learn a lot ASAP. Either situation is weak!
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Old 11-09-2008, 09:23 PM   #5
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Thank you all so much for the replies, they are very helpful. I'm going to do some digging using your suggestions, wish me luck!
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