Florida homeowners will see new surcharge on insurance bills to cover insolvent companies

By: Stassy Olmos

TAMPA, Fla. — Homeowners will continue to see an increase in the price to live in paradise with another surcharge tacked onto their insurance premiums in 2023. This is to help the Florida Insurance Guaranty Association (FIGA) cover the claims from insurance companies that have gone into receivership.

When an insurance company goes insolvent and is liquidated, FIGA steps in and takes on all of its existing claims and pays back premiums.

From 2013 to 2020, the nonprofit never had to issue these assessments, but as company after company went into receivership last year, they took on thousands of claims and hundreds of millions in financial responsibility.

However, that was a serious underestimate because just three months later, after Southern Fidelity and then Weston went under. Now, FIGA has about 14,000 claims it needs to pay out.

“We need that money now,” Neal said in a phone interview on Sept. 6.

To help cover the cost, the Florida Office of Insurance Regulation approved another surcharge on existing insurance companies in the state at 0.70%. That’s in addition to a March assessment of 1.3%.

Those charges are then passed down to homeowners in their premiums. You’ll find a line under “Policy charges and credits” on your bill that lists a “FIGA Surcharge.”

For example, one Tampa homeowner’s premium in June 2022 was $9,000 and had a .70% FIGA surcharge of $63.00.

Neal said most premiums for the first half of 2023 would see a total of a 2% surcharge, depending on when they renewed last.

We try to really base the assessment on a particular insolvency. So this latest one was really to help us cover Southern Fidelity Insurance Company which went insolvent in June of 22. So we’re expecting that to be anywhere from $170 to about $190 million. So what this assessment will do is, will help us shore that up,” Neal explained.

He added that because they need the money now, they’ve taken out a loan with Wells Fargo for $150 million and will pay it back with the surcharge funds as they come in.

In the last two years, FIGA has issued three surcharges — each after major insolvencies.

  • In 2021 FIGA issued an assessment of .70% to cover claims from Gulfstream and American Capital. 
  • In early 2022, they issued a 1.3% assessment for St. Johns and Avatar and a few from Lighthouse. 
  • Now they are issuing what they call 22b, another .70% assessment, primarily for Southern Fidelity and some from Weston.

Neal said because we’re in hurricane season, their biggest task right now is making sure they are ready if a storm hits, and they need to take on thousands more policies overnight.

The good news for homeowners is that2% is the max assessment FIGA can place on insurance companies in one year unless there is a hurricane in the state — then they can assess up to another 4%.

“This article explains some key points that the public needs to understand. It is unfortunate that the citizens of Florida are having to pay
these increased taxes, to cover the claims of FIGA. If the state of
Florida would have acted years ago on stopping the fraud in assignment
of benefits, and run away litigation we would not have this insurance
crisis on our hands. It is imperative that the state focus on extreme
measures to stop this fraud as more companies teeter on the brink of
bankruptcy.” Brian Hodgers, Complete Choice Insurance

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