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United Property & Casualty Insurance Co., now in the midst of an orderly run-off after years of heavy losses, had planned on giving 60 days’ cancellation notice to policies still in force as of May 31, 2023. But Florida regulators are now requiring 120 days’ notice.

“It’s good to see that policyholders will be given 120 days notice and it’s good for agents to have more time on that,” said Kyle Ulrich, president of the Florida Association of Insurance Agents.

Florida Insurance Commissioner David Altmaier this week signed off on a consent order, revising UPC’s runoff plan and tightening oversight of the troubled company. UPC announced in August that it was pulling out of several states, including its home state of Florida, and would non-renew most of its policies.

The Florida Office of Insurance Regulation consent order noted that as of Nov. 1, UPC had about 142,785 policies in force in Florida, and would still have some 70,287 in force on May 31. The carrier’s runoff plan, submitted in mid-November, said it would give two months’ notice to those remaining policyholders.

But two months’ notice, while more than statutorily required, is not enough, Altmaier’s office said.

“As a condition of approval for the early cancellation of its policies in Florida that will not have been nonrenewed prior to June 1, 2023, United must provide affected policyholders in Florida with at least 120 days’ notice of cancellation, instead of the 60 days notice contemplated” in the company’s proposed plan, the order reads.

UPC also must submit its cancellation notices, policyholder notices and agent notices to the OIR for approval.

United also reported in its initial plan that a subset of policies up for renewal in November and December were not sent proper notices of renewal. The carrier proposed to now send the notices, then quickly cancel the policies, with 60 days’ notice. But OIR said that the plan would create confusion and consumer harm. It ordered UPC to extend coverage for those policies for 120 days, then non-renew them.

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“That’s good. Maybe by then, the market will be in better shape and policies can be placed more easily with other carriers,” Ulrich said.

Officials with United and its publicly traded holding company have usually not responded to interview requests about its financial situation.

The OIR order notes that UPC must maintain staff to respond to policyholders, must submit its customer service script to OIR for approval, and its agents must assist in placing policies with other carriers. All unearned premiums should be returned to policyholders by June 1, 2023.

The consent order also sheds new light on the financial troubles and restructuring efforts that United has been through in the last 18 months:

  • UPC saw a big decline in underwriting results, with losses exceeding $35 million in each of the last five years. It reported a net underwriting loss of almost $170 million in the third quarter of 2022. The surplus as of Q3 was $57 million, a huge drop from the 2021 reported policyholder surplus of $169 million, the order notes.
  • The company announced late last year that it would stop writing new homeowner policies in Florida. It took other steps to regain its footing, including consolidating four sister companies into two. Despite those moves, underwriting losses continued.
  • In July, the Demotech financial rating firm downgraded UPC significantly. Without a favorable rating, UPC policyholders with mortgages could have been forced to find new HO insurance or be force-placed into more expensive policies. To get around that, Florida officials said in July that they had found an exception to the Fannie Mae and Freddie Mac secondary mortgage lender rules: If an insurer can show that all claims will be paid in case of insolvency, a financial rating is not required. The state-created Citizens Property Insurance Corp. would serve as the backstop, utilizing a type of reinsurance arrangement known as a cut-through endorsement.
  • UPC was one of the few carriers to sign up for that Temporary Market Stabilization Arrangement. But the arrangement is only temporary, OIR said.

“United has been unable to secure reinsurance commitments for the 2023 hurricane season,” the consent order explains. “The company has no rating acceptable to the secondary mortgage market, and the Temporary Market Stabilization Arrangement terminates on May 31, 2023.”

The company now plans to reduce the fees paid to its managing general agency, something the OIR approved, with the stipulation that the payments be made weekly. UPC also plans to alter how its reinsurance tower is allocated between it and its sister company, American Coastal Insurance Co.

United said in its initial plan that the runoff would likely last beyond the end of 2024.

“The plan indicates that the company intends to manage and fund its losses and loss adjustment expenses in 2024 and subsequent years through reinsurance recoveries, capital from the parent or other sources which the company projects will provide sufficient liquidity to manage the runoff,” the plan noted.