stewart

Florida lawmakers expected to OK plan at alleviating state’s property insurance woes

TALLAHASSEE, Fla. – Millions of Floridians have mortgages that require insurance companies to be financially rated. Right now, only one organization will rate a company less than 5 years old. It’s why the state is now looking at possible alternatives.

This Friday, the Joint Legislative Budget Commission is expected to greenlight a proposal to spend $1.5 million to hire a consultant. According to documents obtained by News 6 pertaining to the meeting, that consultant would “explore alternative methods and develop options for admitted property insurance companies to acquire a financial rating satisfactory to federal mortgage standards.”

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“I’m very supportive of this $1.5 million dollars,” said state Sen. Linda Stewart (D-Orlando). “I think it’s a good thing that we’re doing this.”

Stewart is on the committee. She said the proposal is about exploring options.

“What we need to do is investigate how we might be able to do that. Investigate how other states might have one or two. Who are they? How are they doing it? Because we should not be limited to one company,” Stewart said.

That one company is called Demotech. This July, it was warned that 17 property insurance companies could face downgrades.

“When you do that what happens is you send the notice to the mortgage company, the mortgage company goes ‘Oh, I don’t want to have an insolvent company with hurricane season coming up,’” Stewart said.

[RELATED: Find all of News 6′s coverage on Florida’s property insurance crisis]

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Most homeowners in Florida have loans backed by Fannie Mae and Freddie Mac. They require an insurance company to be financially rated. A

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