HomeWise Insurance Ordered Into Liquidation

Florida-based homeowners writer HomeWise Insurance Co. has been ordered into liquidation. The move comes days after HomeWise sold off its Florida and Louisiana homeowners books.

The insurer was deemed insolvent under Florida statutes, according to court documents. HomeWise had direct premiums written of $26.6 million and a policyholders' surplus of $9.7 million in 2010, according to BestLink. It suffered a net loss of $9.2 million that year.

The Florida Insurance Guaranty Association will help pay outstanding claims, according to the FIGA website. The maximum amount FIGA will cover is generally $300,000 per claim. An additional $200,000 is available for structure and contents on homeowners' claims.

However, the insurer recently sold its Louisiana and Florida books of business (Best's News Service, Nov. 14, 2011). Lighthouse Property Insurance Corp. bought more than 11,000 Louisiana policies, representing in-force premiums of about $25 million. Terms of the deal were undisclosed. Starting Jan. 1, the policies will be renewed on Lighthouse paper, according to Lighthouse. Earlier, up to 70,000 HomeWise Florida homeowners policies were acquired by Homeowners Choice (Best's News Service, Nov. 10, 2011). Homeowners Choice Chief Executive Officer Paresh Patel said during a conference call earlier this month that HomeWise was "effectively exiting the Florida business, the Florida insurance market."

HomeWise's affiliated company, HomeWise Preferred Insurance Co also was recently placed into liquidation. HomeWise Preferred became insolvent because of sinkhole-related claims (Best's News Service, Sept. 6, 2011). Sinkhole claims more than tripled in Florida between 2006 and 2009, according to a study last year by the Florida Office of Insurance Regulation. The OIR reported that 66% of claims are concentrated in three counties -- Hernando, Pasco and Hillsborough. However, there is an increase in reported sinkholes in parts of south Florida, including Miami-Dade and Broward counties, where sinkholes historically haven't been an issue.

HomeWise began operations in Florida after the 2004-2005 storm seasons, according to the company's website. The company was the 15th-largest homeowners writer in Florida, with 1.7% market share, according to BestLink.

The top five writers of homeowners multiperil in Florida in 2010 were Citizens Property Insurance Corp., with 15.3% market share; State Farm Group, with 12.97%; Universal Insurance Holdings Group, with 7.98%; Tower Hill Group, 4.74%; and USAA Group, with 4.64%, according to BestLink.

(By Rick Cornejo, managing editor, BestWeek: [email protected])