Florida has experienced more property insurer insolvencies than any other state in recent memory. Between 2019 and 2023, more than a dozen Florida-domiciled property insurers were declared insolvent or placed into receivership. For property managers, a carrier insolvency mid-policy is not a hypothetical risk -- it is something that has happened to property managers across the state, including during active claim periods following major hurricanes.
Why Florida Has Elevated Insurer Insolvency Risk
Florida's insolvency rate is driven by the intersection of several factors. The state's hurricane exposure is among the highest in the nation, and repeated active seasons -- particularly 2017 (Irma), 2018 (Michael), and 2022 (Ian) -- produced loss ratios that exceeded many carriers' assumptions. Compounding the pure weather exposure, Florida's litigation environment prior to the 2022 reforms produced extremely high claim costs relative to other states: attorney fee multipliers, assignment of benefits abuse, and inflated repair costs all drove losses well above what reinsurance contracts anticipated. When reinsurance costs surged in response, smaller domestic carriers found they could not price coverage to cover their costs while remaining competitive, and many could not secure adequate reinsurance at any price.
What the Florida Insurance Guaranty Association Is
The Florida Insurance Guaranty Association (FIGA) is a state-created safety net that pays covered property insurance claims when a Florida-admitted (not surplus lines) insurer is declared insolvent. FIGA is not a government agency -- it is a nonprofit entity funded by assessments on other Florida property and casualty insurers. When the DFS declares an insurer insolvent and appoints a receiver, FIGA steps in to handle covered claims up to its statutory limits.
What to Do Immediately When Your Insurer Is Declared Insolvent
When the DFS declares an insurer insolvent, policyholders typically receive notice from the receiver. Do not wait for that notice if you hear about an insolvency through news coverage. The immediate steps are: register your policy with FIGA by contacting the number or website FIGA publishes for the specific insolvency; document any pending claims and their current status; and begin shopping for replacement coverage immediately.
Replacement coverage is critical. FIGA is a short-term backstop, not a long-term insurance solution. The receiver typically cancels all policies shortly after the insolvency declaration, leaving policyholders without coverage going forward. Finding a replacement carrier quickly -- which may mean Citizens Property Insurance as the insurer of last resort if private market options are unavailable -- is the priority.
A significant portion of Florida property managers, particularly those in coastal areas or with high-value properties, are covered by surplus lines carriers -- non-admitted insurers that operate in Florida under different rules than admitted carriers. FIGA does not cover claims on surplus lines policies. If a surplus lines carrier becomes insolvent, policyholders have no state guaranty fund backstop. This risk is one reason to carefully evaluate surplus lines carriers before placing coverage with them.
What Happens to a Pending Claim When an Insurer Becomes Insolvent Mid-Claim
If you have an open claim with an insurer when insolvency is declared, that claim is inherited by FIGA (for admitted carriers) and will be resolved subject to FIGA's coverage caps. The claim will not be extinguished by the insolvency, but the resolution process may be slower than it would have been with a functioning carrier. Document the current status of your claim thoroughly -- all correspondence, adjuster reports, contractor estimates, and payments received to date -- and provide that documentation to FIGA when you register.
How to Check Your Carrier's Financial Strength Before Renewing
The two primary rating systems for Florida property carriers are Demotech and AM Best. Demotech rates many Florida domestic carriers; a Financial Stability Rating of A or A-Prime from Demotech is generally required for federally backed mortgages. AM Best ratings of A- (Excellent) or better are the standard for carriers rated through that system. Beyond the letter rating, look at whether the carrier has adequate surplus relative to its premium volume, whether it is writing new business in Florida or pulling back, and whether it has recently received DFS market conduct scrutiny. Your independent insurance agent should be tracking carrier health actively and should flag any concerns at renewal.
A carrier that was financially sound when you placed coverage can deteriorate significantly in 12 months in Florida's volatile market. Make it a practice to check the current Demotech or AM Best rating of your carrier at every renewal -- not just when you first place coverage. If the rating has declined or been withdrawn, ask your agent for an explanation and consider whether the carrier remains an appropriate choice for your portfolio.
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Start Free -- No Card Required ->The Bottom Line
Florida insurer insolvencies are a real risk for property managers, not a theoretical one. Understanding FIGA's role and limits, knowing what to do when an insolvency is declared, and actively monitoring carrier financial strength are basic risk management practices in the Florida market. For related guidance, see how to audit your Florida property insurance portfolio, Florida property insurance renewal tips, and Florida landlord insurance requirements.