Upc Insurance: Admitted Or Not?

UPC Insurance, or United Property and Casualty Insurance Company, was an admitted insurance carrier. This means that it was licensed and approved by the state of Florida to provide insurance coverage. Admitted insurance carriers are endorsed by the state and must adhere to regulations set by the state's Department of Insurance (DOI) or insurance commissioners. They offer greater financial security to their customers, as the state steps in to make payments on claims in the event of financial instability. However, they have less flexibility in designing policies and typically offer more standard coverage options. UPC Insurance was ordered into liquidation in February 2023 due to insolvency, and its parent company has since rebranded as American Coastal Insurance.

UPC Insurance was deemed insolvent by Florida regulators in 2023

UPC Insurance, or United Property & Casualty Insurance Co., was deemed insolvent by Florida regulators in 2023. The company faced significant financial challenges in the years leading up to its insolvency, with net underwriting losses of over $35 million annually since 2017. UPC Insurance struggled to obtain reinsurance for the 2023 hurricane season and was impacted by higher-than-expected losses from Hurricane Ian, which made landfall in Southwest Florida as a Category 4 storm.

The road to insolvency for UPC Insurance was a prolonged one. As early as 2020, the company reported underwriting losses of $36 million due to weather events in Florida, Texas, and Louisiana. This prompted the Florida Office of Insurance Regulation (OIR) to require UPC Insurance to file monthly financial statements and participate in regular calls with regulators. Despite these efforts, UPC Insurance continued to experience underwriting losses, with $69 million in 2020, $54 million in 2021, and nearly $190 million in the first three quarters of 2022. The company's surplus steadily declined during this period, falling from $159 million at the end of 2019 to $57 million in the fall of 2022.

In July 2022, UPC Insurance's financial rating was downgraded below the level required by mortgage industry giants Fannie Mae and Freddie Mac. This led to the company being placed under "public administrative supervision" by the OIR, with a plan for Citizens Property Insurance to serve as a backstop in case of insolvency. Despite these efforts, UPC Insurance continued to face financial challenges, and in November 2022, the company submitted a revised runoff plan that included expected claims and losses from Hurricane Ian.

In early 2023, UPC Insurance transferred approximately 72,000 policies to Slide Insurance Co. as part of its wind-down process. However, it was soon announced that UPC Insurance was officially insolvent and headed for liquidation. The Florida Office of Insurance Regulation's director of property and casualty financial oversight stated that UPC Insurance was deemed insolvent because its assets were insufficient to cover its liabilities. This marked the 10th insolvency of a Florida property carrier in the last two years and highlighted the ongoing challenges facing the state's property insurance market.

The insolvency of UPC Insurance and other carriers has had significant implications for policyholders and the insurance industry in Florida. The Florida Insurance Guaranty Association (FIGA) has had to step in to handle claims from insolvent companies, leading to potential surcharges for policyholders. Additionally, the state-backed Citizens Property Insurance Corp. has provided policies to homeowners who lost coverage due to insurer insolvencies. The situation underscores the importance of understanding the financial stability and regulatory compliance of insurance carriers when making decisions about coverage.

UPC Insurance is now American Coastal Insurance Corp

UPC Insurance, or United Property & Casualty Insurance Company, was an American property and casualty insurance company headquartered in Florida. It wrote commercial, residential, homeowners', and flood insurance policies in several coastal states.

In August 2022, UPC Insurance announced its plan to leave the Florida Property Insurance market, intending to cancel all remaining policies by May 31, 2023, before the start of the hurricane season. However, Hurricane Ian struck Florida in late September 2022, resulting in 25,000 claims for UPC. The company initially projected losses of $660 million, but by the end of 2022, the losses were revised to $864 million.

Due to its dire financial situation, UPC notified Florida's Office of Insurance Regulation, leading to the Insurance Commissioner seeking court approval to place UPC into receivership. In February 2023, Slide Insurance assumed 72,000 of UPC's policies, and UPC was subsequently declared insolvent.

Following the insolvency of UPC Insurance, its parent company, United Insurance Holdings, rebranded itself as American Coastal Insurance Corp. This change took effect on August 15, 2023, when the company's stock market symbol also changed to "ACIC."

American Coastal Insurance, founded in 2007, specializes in providing insurance for condominium and homeowner association properties and apartments exclusively in the state of Florida. The company has received positive financial stability ratings, including an "A Exceptional" rating from Demotech and an "A-" insurance financial strength rating from KBRA.

American Coastal Insurance, through its partnership with AmRisc Group, offers fair terms, competitive pricing, and a best-in-class claims service. Its catastrophe reinsurance protection is designed to meet or exceed standard protection levels for AM Best "A" rated carriers, providing added assurance for policyholders.

Admitted insurance carriers are endorsed by the state

Before an admitted carrier can sell insurance in a particular state, the state's authorities review and verify the carrier's policy forms, rates, and other components to ensure they meet the state's insurance standards. This provides assurance to consumers that the insurance products on offer are fair and legitimate.

Another benefit of admitted insurance carriers is financial security. In the event of financial instability or insolvency, the state steps in to make payments on claims. This safety net ensures that policyholders' claims are honoured, providing peace of mind and security to consumers.

The state endorsement also gives admitted insurance carriers a level of legitimacy and credibility. Consumers can be confident that the carrier has undergone rigorous scrutiny and approval by the state, reducing the risk of fraud or malpractice.

Furthermore, admitted insurance policyholders have certain rights and protections. For example, if a policyholder believes their claim has been mishandled, they have the right to appeal to the state insurance department. This provides a level of accountability and consumer protection that may not be available with non-admitted carriers.

In summary, the state endorsement of admitted insurance carriers brings regulatory compliance, financial security, legitimacy, and consumer protection. These factors contribute to a more stable and secure insurance market, benefiting both consumers and the industry as a whole.

Non-admitted insurance carriers are not endorsed by the state

Non-admitted insurance carriers, also known as excess and surplus lines carriers, are not endorsed by the state and are not subject to the same regulations as admitted insurance companies. This means they have greater flexibility in designing policies and setting prices, and can offer coverage for unconventional or high-risk scenarios that admitted carriers may not be able to provide.

Non-admitted insurance carriers do not have to comply with state insurance regulations as strictly as admitted carriers. While some states do regulate non-admitted carriers, the rules are generally more relaxed compared to those governing admitted insurers. This regulatory independence allows non-admitted carriers to offer specialised or unique coverage options that may be outside the scope of standard insurance markets. For example, they can provide coverage for high-risk events such as floods, earthquakes, and wildfires, which admitted carriers might not be able to afford to cover.

The lack of state endorsement also means that non-admitted insurance carriers do not benefit from the state's financial safety net. In the event of financial instability or insolvency, the state does not step in to make payments on claims as it would for an admitted carrier. This means that policyholders' claims may not be honoured if the non-admitted insurance company faces financial difficulties or bankruptcy.

Non-admitted insurance carriers also do not provide the same level of recourse for policyholders who believe their case has been mishandled. With admitted carriers, policyholders have the right to appeal to the state insurance department if they feel their claim has been improperly handled. This option is typically not available with non-admitted carriers.

It is important to note that non-admitted insurance carriers are still legitimate and financially stable companies. They are subject to some regulations, such as the requirement to submit company information and financial details to the state surplus lines office. Additionally, their agents must be licensed brokers. While they may not have the endorsement of the state, non-admitted carriers can still provide valuable coverage options for individuals and businesses with unique or high-risk insurance needs.

Admitted and non-admitted carriers have different benefits

Admitted and non-admitted carriers have distinct benefits. UPC Insurance (United Property and Casualty Insurance Company) was ordered into receivership for liquidation in February 2023. This suggests that it was an admitted carrier, as the state steps in to manage claims in the event of a company's failure.

Admitted Carriers

Admitted carriers are licensed by the State Department of Insurance or insurance commissioners where they operate. They must comply with state regulations and are subject to state verification, which includes reviewing and verifying policy forms, rates, and other components to ensure compliance with state insurance standards.

The key benefits of admitted carriers are:

• State-backed guarantee: The state insurance fund will step in to make payments on claims if the admitted carrier fails or becomes insolvent, thus guaranteeing coverage for policyholders.
• Appeal option: Policyholders can appeal a decision or dispute a claim with the state department of insurance if they believe their claim was improperly handled.
• Regulatory compliance: Admitted carriers provide the security of adhering to state regulations, ensuring that their policies, rates, and requirements align with state insurance laws.

Non-Admitted Carriers

Non-admitted carriers, also known as excess and surplus line carriers, operate without specific state approval and are regulated by the state surplus lines office. They are not required to follow the same state regulations as admitted carriers, allowing them greater flexibility in pricing and coverage options.

The key benefits of non-admitted carriers are:

• Coverage flexibility: Non-admitted carriers can offer specialised or unique coverage options for unconventional or high-risk scenarios that admitted carriers may not cover. They can be more flexible in the risks they insure.
• Creative policy writing: Non-admitted carriers can get creative with their policies, insuring specific and expensive equipment or high-profile individuals.

The choice between admitted and non-admitted carriers depends on the specific needs of the business. Admitted carriers provide the security of state regulation and guarantee, while non-admitted carriers offer greater flexibility in coverage and pricing, catering to high-risk or specialised insurance needs.

Frequently asked questions