A Florida judge has signed-off on a plan by regulators to allow a failed Florida property insurer’s policyholders to be assumed by another company, although policyholders will retain the option to seek coverage elsewhere.

Leon County Judge Kevin Carroll on Friday approved the deal that could result in Heritage Property and Casualty Insurance Co. assuming as many as 36,000 policyholders left seeking coverage due to the insolvency of the Sunshine State Insurance Co.

The Jacksonville, Fla.-based Sunshine State was taken over by the Department of Financial Services Division of Rehabilitation and Liquidation on June 3 after the state Office of Insurance Regulation reported the insurer could no longer meet the state’s capital requirements.

Sunshine State officials said that an accounting error related to its 2008 and 2011 catastrophic reinsurance treaties and a 2013 fourth quarter operational loss left the insurer in an untenable financial position.

Subsequent to taking over Sunshine State, the DFS held a bidding process that involved 10 companies that were evaluated based on a number of criteria including rates, surplus, catastrophic coverage and other financial considerations.

As a result, the Clearwater, Florida-based Heritage secured the non-exclusive rights to assume Sunshine State’s residential homeowner and condominium book of business.

DFS Spokesperson Chris Cate said the goal is to continue Sunshine State’s policyholders’ coverage with as little disruption as possible.

“We make it a top priority to ensure that the impacted policyholders are able to maintain coverage with a sound company and that families are protected in the event of a damaging storm or other unforeseeable disaster,” said Cate.

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http://www.insurancejournal.com/news/southeast/2014/06/16/332133.htm