How Florida taxpayers could be forced to pay millions after insurers go bankrupt

TAMPA, Fla. (WFLA) — Another property insurance company is considering pulling out of Florida after being downgraded by ratings agency Demotech.

Mahsa Saeidi of 8 On Your Side confirmed on Thursday that United Property & Casualty Insurance Company (United P&C) is planning to pull out amid the state property insurance crisis.

Several other companies have already left the state or failed completely. So what kind of impact does this have on Floridians?

When a business fails, policyholders are directly affected. But sometimes, so do taxpayers.

8 On Your Side discovered that Florida taxpayers could end up paying millions after the recent bankruptcy of two insurance companies: St. Johns Insurance Company and American Capital.

In 2004, Florida experienced a brutal hurricane season. Four named storms have hit the state, leaving a trail of destruction and a boiling property insurance market.

“All the national carriers had left the state,” said insurance broker Ronald Assise CIC, CPRM.

Two years later, lawmakers attempted a solution. This is called the Insurance Capital Building Incentive Program. Basically, to attract insurance companies, Florida gave huge loans, up to $25 million per company. The loans are administered by the State Board of Administration, or SBA.

Assisi watched it all unfold, grateful that he thought it was a good idea.

“The idea was to bring more carriers into the state,” he said.

The program has created competition for consumers. But did it also create a big bill for you, the taxpayer, up to almost $7 million?

The answer is maybe.

“I think it’s extremely possible based on the pecking order and the fact that so many others are going to get paid first,” Assisi said.

Let’s explain.

Years ago, American Capital and St. Johns Insurance Company each got loans from Florida. In recent months, both have gone bankrupt.

But at the time of the liquidation, the companies had not repaid their loans.

According to state documents, St. Johns still owes Florida more than $5.3 million and American Capital more than $1.6 million.

We asked the SBA if Florida will get back the taxpayer money we loaned out or is it gone forever. A spokesperson said the response was “unknown at this time”.

“That $5.3 million — the state may never see another dollar of that,” Assisi said.

Insurance insolvency proceedings are ongoing. In each case, Florida filed a claim with the estate.

But Florida is not a secured creditor. Experts say this means that by the time other creditors are paid, there will likely be little money left for the state.

If you are a United P&C customer, email Investigator Mahsa Saeidi at [email protected]

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