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How Florida taxpayers could be on the hook for millions after insurers fail

NBC – 8 WFLA (Tampa, FL)

TAMPA, Fla. (WFLA) — Another property insurance company plans to withdraw from Florida after being downgraded by ratings agency Demotech.

8 On Your Side’s Mahsa Saeidi confirmed Thursday that United Property & Casualty Insurance Company (United P&C) has plans to withdraw amid the state’s property insurance crisis.

Several other companies have already left the state or failed altogether. So what kind of impact does that have on Floridians?

When a company goes down, policyholders take a direct hit. But at times, so could taxpayers.

8 On Your Side found Florida taxpayers could be on the hook for millions after the recent failure of two insurance companies: St. Johns Insurance Company and American Capital.

In 2004, Florida had a brutal hurricane season. Four named storms hit the state, leaving a trail of destruction and a property insurance market in turmoil.

“All the national carriers had left the state,” insurance broker Ronald Assise CIC, CPRM, explained.

Two years later, lawmakers attempted a fix. It’s called the Insurance Capital Build-Up Incentive Program. Basically, to attract insurance companies, Florida handed out huge loans, up to $25 million per company. The loans are managed by the State Board of Administration, or SBA.

Assise watched it all unfold, acknowledging that he thinks it was a good idea.

“The idea of this was to bring more carriers into the state,” he said.

The program created competition for consumers. But did it also create a big bill for you, the taxpayer, up to nearly $7 million?

The answer is maybe.

“I think it’s extremely possible based on the pecking order and the fact that so many others are going to get paid first,” said Assise.

Let’s explain.

Years ago, American Capital and St. Johns Insurance Company each got loans from Florida. In recent months, both went bankrupt.

But at the time of liquidation, the companies had not paid off their loans.

According to state documents, St. Johns still owes Florida more than $5.3 million and American Capital owes more than $1.6 million.

We asked the SBA if Florida will get the tax dollars we loaned back or if they’re gone forever. A spokesman said the answer is “unknown at this time.”

“That $5.3 million – the state may not ever see another dollar of that,” said Assise.

Insurance insolvency proceedings are underway. In each case, Florida has filed a claim with the estate.

But Florida is not a secured creditor. Experts say that means by the time other creditors are paid, there’ll likely be little money left for the state.

If you are a customer of United P&C, email Investigator Mahsa Saeidi at MSaeidi@WFLA.com.

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