Insurance policies

Slide takes over 140,000 St. Johns insurance policies

Customers of the defunct St. Johns Insurance Company have found a new home in Slide.

The insurance company absorbed about 140,000 policyholders left behind when St. Johns has been placed in receivership last month. St. Johns was the eighth largest insurer in the state, with 170,000 policies in its portfolio at its peak.

The company was one of many to fail last month. On the same day, St. Johns’ financial rating was downgraded by Demotech, Avatar Insurance also yielded.

As St. Johns exited the market, industry onlookers feared many of its policyholders would have to turn to Citizens Property Insurance Corp., the state-backed insurer of last resort.

The number of citizen policies recently topped 800,000 – more than double nadir – and is growing by around 5,000 new policies every week.

Experts have warned that the fall of two traditional property insurers, such as St. Johns, could cause citizens to cross 1.5 million fonts. With so many policies, a major hurricane or natural disaster would strain state finances.

Enter Slide, which intercepted policies before they fell into citizens’ wallets and provided St. Johns policyholders with much-needed relief.

Since the company has taken control of its current policies – offering the same coverage for the same premium – owners won’t have to search and pay for new insurance while they wait for reimbursement of payments they made to St Johns.

Slide was perhaps the only insurer operating in the state with the financial health to take on the St. Johns policy count, and received support from the Florida Association of Insurance Agents, which views the transaction as in the best interests of policyholders.

Other companies were interested in picking the St. Johns portfolio, taking 10,000 to 20,000 policies, which would have greatly increased the overall risk for the rest of the St. Johns portfolio, which would have gone entirely to the citizens.

Slide was the only company to submit a viable offer to take on the full number of policies and its approval would have positive implications for the entire insurance market.

The Florida Insurance Guaranty Association approved a $190 million assessment on Florida homeowners after the fall of St. Johns and other smaller insurers. Combined with an assessment approved last year, FIGA approved $358 million worth of assessments in less than six months.

Although a bitter pill to swallow, insurance adjusters say the most recent valuation would have been much higher had Slide not taken over the St. Johns policies.

Slide also provided coverage for the 15,000 St. Johns customers whose policies were canceled before the company went into receivership. These customers had already been rejected by other private insurers.

Yet the property insurance market is not out of the woods.

Year-end financials show Florida home insurance companies lost another $1.5 billion in 2021, with Progressive leading the pack by $250 million in the red. This total does not include the losses associated with St. Johns, however mitigated by the Slide transaction, nor the losses associated with the Avatar receivership.

The losses could potentially cause a domino effect of large companies exiting the market.

Despite the dire circumstances, property insurance reforms appear to have died in the final days of the session due to differences between the House and Senate’s approach to roofing insurance.

The Senate Property Insurance Bill (SB 1728) contains a series of changes aimed at reducing lawsuits and limiting the costs associated with roof damage claims. The most debated provision would allow insurers to limit coverage to the “declared value” of a roof, rather than a scale of depreciation over time, and allows insurers to charge a special deductible for the roof that can reach 2% of coverage limits.

It’s been a no-start in the House, with the Speaker of the House Chris Sprows saying he fears homeowners on low and fixed incomes would not be able to afford to repair their roofs if they had such a policy.

“I want to make sure people get compensated,” the Palm Harbor Republican said last month. “If you have a hurricane and you have a senior on a fixed income, I’m aware that they might not be able to get a huge roof.”

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