If I was running the Florida Department of Insurance and knew that my state’s insurance backstop was composed of several of these little companies, I’d be doing everything in my power right now to make sure State Farm stayed in Florida.
Magnolia isn’t a small company, they have over 100,000 policies on the book. What the state needs to do is look at the Citizens takeout program. It really looks to me like this company simply bit off more than they could chew. If the state wouldn’t have allowed it, maybe they’d still have their Demotech rating.
Mr. Solvent, good point. Perhaps the State needs to support these companies and help them resolve these issues so that nothing goes back into Citizens. The depopulation program has its faults, but now they have to work with what they have already approved. Going backwards is not an option at this point.
Agreed. The state seems to be so zealous at shedding these policies that they allow these things to happen. With that said, I don’t have much confidence in Demotech’s ability to “upgrade” a company to an “A” finacial status so I’m not sure how credible a “downgrade” is either.
Demotech is just like any other ratings firm. For a fee they review the information provided to them. A Exceptional is 3rd on the list after A Double Prime and A Prime. Perhaps a little misleading. I give this firm credit for calling the whole Poe fiasco before the s**t hit the fan and long before AM Best had it figured out. That said, I don’t trust ANY ratings firm. I want to see the financials myself to make a determination on representation at my agency.
Demotech has done a decent job. My markets today are Best rated but Demotech was the one that stepped up to rate these markets 6 to 10 years ago when no one else would do it.
Some good comments so far, but for those of you who think Demotech has done a decent job…we’ve seen three Florida Domestics fail this year, and I believe Demotech withdrew their A ratings soon after or just before the Insurance Dept took these companies over. All were rated A.
In my view, Demotech is nothing but a marketing tool agents can use to convince their clients and mortgage companies that the small Florida domestics insurers are safe. It’s a scam.
Also, consider that People’s Trust was shut down by the Floirda CFO a few months back for using unlicensed sales people, mishandling claims, not enough insurance experience for their executives, and inadequate reinsurance. Yet, Demotech still has them rated as an A company while they have about $10 million in total reserves.
First Floridian, American Strategic, Florida Family and others are Best rated today because of Demotech. If companies are Best rated years after they are Demotech rated, Demotech must be doing something right.
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Does anyone remember Hugo, the insurers rated by Best and how many of them were gone in a day or two???
Demotech alerted us to the Southern Family Insurance situation about 8 months before Best. I think they are doing a decent job.
At least they are helping agents and policyholders when others do not.
PS – Arthro, Moodys, Standard and Poors and Fitch only publish finalized ratings and the ones they publish are all greast ratings.
If I was running the Florida Department of Insurance and knew that my state’s insurance backstop was composed of several of these little companies, I’d be doing everything in my power right now to make sure State Farm stayed in Florida.
Magnolia isn’t a small company, they have over 100,000 policies on the book. What the state needs to do is look at the Citizens takeout program. It really looks to me like this company simply bit off more than they could chew. If the state wouldn’t have allowed it, maybe they’d still have their Demotech rating.
Mr. Solvent, good point. Perhaps the State needs to support these companies and help them resolve these issues so that nothing goes back into Citizens. The depopulation program has its faults, but now they have to work with what they have already approved. Going backwards is not an option at this point.
Agreed. The state seems to be so zealous at shedding these policies that they allow these things to happen. With that said, I don’t have much confidence in Demotech’s ability to “upgrade” a company to an “A” finacial status so I’m not sure how credible a “downgrade” is either.
Demotech is just like any other ratings firm. For a fee they review the information provided to them. A Exceptional is 3rd on the list after A Double Prime and A Prime. Perhaps a little misleading. I give this firm credit for calling the whole Poe fiasco before the s**t hit the fan and long before AM Best had it figured out. That said, I don’t trust ANY ratings firm. I want to see the financials myself to make a determination on representation at my agency.
Demotech has done a decent job. My markets today are Best rated but Demotech was the one that stepped up to rate these markets 6 to 10 years ago when no one else would do it.
It’s the Florida Office of Insurance Regulation and not Florida Department of Insurance.
Some good comments so far, but for those of you who think Demotech has done a decent job…we’ve seen three Florida Domestics fail this year, and I believe Demotech withdrew their A ratings soon after or just before the Insurance Dept took these companies over. All were rated A.
In my view, Demotech is nothing but a marketing tool agents can use to convince their clients and mortgage companies that the small Florida domestics insurers are safe. It’s a scam.
Also, consider that People’s Trust was shut down by the Floirda CFO a few months back for using unlicensed sales people, mishandling claims, not enough insurance experience for their executives, and inadequate reinsurance. Yet, Demotech still has them rated as an A company while they have about $10 million in total reserves.
Do you still think Demotech is doing a good job?
First Floridian, American Strategic, Florida Family and others are Best rated today because of Demotech. If companies are Best rated years after they are Demotech rated, Demotech must be doing something right.