Florida-based property-casualty insurer UPC Insurance is insolvent and is to be liquidated, according to a consent order made public on Feb. 17. If you have clients who own UPC policies, we urge you to contact them as soon as possible to inform them of this development and discuss replacing coverage.
The insurer, which as of last summer had 151,325 policies in force in six states other than Florida (including Connecticut,) was under the supervision of the Florida Office of Insurance Regulation pursuant to a runoff plan agreed to by the insurer and the OIR last December. The plan was for the insurer to remain solvent while making an orderly exit from its markets .
However, the OIR informed the Florida Department of Financial services on Feb. 16 that UPC is insolvent According to an affidavit signed by Virgina A. Christy, the OIR's director of property & casualty financial oversight, the company's policyholder surplus at the end of 2022 was negative $217,603,217. This means that if the company sold all its assets on Dec. 31, 2022, almost $218 million in losses would remain unpaid.
The company signed a consent order on Feb. 8 agreeing to the appointment of the DFS as receiver "for purposes of Rehabilitation or Liquidation ..." Once a state court formally appoints DFS as the receiver and approves a liquidation plan, the department will begin the process.
Under a prior consent order, UPC was under court orders to cancel all policies by May 31, 2023. It is unclear whether the Florida DFS will seek to have that date moved up.
According to a report in Insurance Journal, the Florida Insurance Guaranty Association will handle as many as 20,000 claims resulting from the liquidation.
If you have clients insured by UPC, you may want to contact them to inform them of the insolvency and discuss what their next steps might be. Big I Connecticut members have free access to our ebook The Big I NY Big Book of Form Letters & Other E&O Tools. Among the form letters included in the book is one titled "Letter To Customer Advising that Insurer's Financial Rating Has Been Downgraded." You may find this form letter useful for your communications with clients. You can download a copy of the book in PDF format from the Big I New York Portal.