Avatar becomes second Florida insurer to face insolvency this year


Two weeks after St. Johns Insurance Co. was declared insolvent, Florida regulators moved to begin liquidating Tampa-based Avatar Property & Casualty Insurance Co., making it the second carrier this year to weaken and the sixth in the last 30 months.

The Florida Department of Financial Services on Friday, March 4, asked the Leon County Circuit Court to approve a consent order making DFS the receiver of Avatar “for liquidation purposes.”

Avatar, launched in 2008, is a small insurer in Florida, with about 42,000 home insurance policies, about a quarter the size of St. Johns. But the insolvency is the latest blow to the Florida insurance market, which some industry leaders say is in crisis with more insolvencies likely this year.

Insurance executives said Avatar’s liquidation is unlikely to follow the same path as St. Johns, with all policies transferring to another insurer. Last week, the Florida Office of Insurance Regulation ruffled some feathers when it was learned that Slide, an insurtech startup turned insurer, would assume 147,000 unearned policies and premiums from insolvent St. Johns, without other carriers having the ability to bid on fonts. .

Avatar’s receivership could go the more conventional route, with the state-run Citizens Property Insurance Corp. taking the book of business and other insurers making take-out offers in the coming months, said an executive.

The court has yet to approve Avatar’s receivership and a transition plan had not been filed as of Tuesday morning. But a letter from Insurance Commissioner David Altmaier to DFS, included in the motion to court, notes: “While no insurer has expressed interest in providing coverage to all Avatar policyholders, several insurers have expressed interest in interest in potentially providing coverage to some of Avatar’s policyholders through direct solicitation by their designated agents. »

Avatar’s board of directors voted on February 28 to begin delinquency proceedings, due to the company’s insolvency.

It became clear that Avatar was facing financial difficulties in mid-February, when the company announced it would stop writing new business in the state. The rating firm Demotech then withdrew its financial stability rating from Avatar.

Avatar and St. Johns are two of seven insurers in recent weeks to suspend new business or not renew thousands of policies in Florida. Others have called for double-digit rate increases. Industry insiders and CEOs have been warning for months that the Florida insurance market is in crisis, with most insurers suffering major losses from hurricanes, rooftop claims and legal costs.

The latest insolvency will likely require the Florida Insurance Guaranty Association to cover Avatar’s pending claims. It is unclear whether this will result in another assessment by FIGA on member insurance companies. After St. Johns was liquidated, FIGA approved a 1.3% premium assessment for carriers, an assessment that will be passed on to policyholders in Florida.

Avatar President Hidesh “John” Adhia declined to comment on Tuesday.

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