A growing number of Florida homes are being insured by small, fragile property insurers at risk of becoming insolvent following a major disaster, a Harvard insurance expert told a Senate committee Wednesday.
The insurers are filling gaps created by larger insurers that have canceled or declined to renew policies or have become insolvent amid huge losses following recent hurricanes, the expert told senators investigating the insurance industry and climate change.
Florida’s influx of fragile insurers could occur in other states and has left a growing number of Florida residents covered by companies that may struggle to pay claims quickly, pay them in full to or stay solvent, witnesses told the Senate Banking Committee.
The situation could create financial trouble for policyholders struggling to recover and pay mortgages — and for Fannie Mae and Freddie Mac, the taxpayer-backed entities that own millions of U.S. mortgages.
