Some SC property owners need new insurance after Fla. carrier fails

About 25,000 South Carolina property owners are scrambling to replace their insurance just a few weeks into the 2022 hurricane season, after the carrier that sold the policies was declared financially insolvent.

Customers of Southern Fidelity Insurance Co. are being notified that their property and casualty coverage will be canceled on July 15.

The carrier was placed into receivership last week by regulators in Florida, where it is headquartered. A court has ruled that the company's assets be liquidated.

Southern Fidelity was already suffering from chronic underwriting losses when its financial stability rating was revoked June 2 after it was unable to obtain adequate "reinsurance," which would cover damage claims if a catastrophic event during the 2022 hurricane season wiped out its reserves.

The following week, it was determined that the Tallahassee-based company was "operating in an unsound condition that is hazardous to policyholders, creditors, stockholders and the public," according to Virginia Christy, a director with the Florida Office of Insurance Regulation.

The S.C. Department of Insurance said in a June 24 statement that it was informed that "approximately twenty-five thousand South Carolina policies will be impacted by the liquidation."

Southern Fidelity also sold property and casualty insurance in its home state, Louisiana and Mississippi. About 148,000 policies are being canceled.

The company's collapse leaves little time for property owners and their agents to find new coverage, said Julius J. Anderson, owner of Anderson Insurance Associates in Charleston.

Anderson said Friday. "And rates are going to be higher, and so on and so on."

The S.C. Property and Casualty Insurance Guaranty Association, which lawmakers created as a financial safety net for customers of failed insurers, said "agents should work as quickly as possible to replace" all of the soon-to-be-canceled policies.

"There is no advantage to waiting - and several risks," the Columbia-based group said on its website .

A similar but less-dire situation arose last year when another troubled underwriter reeling from sizable claims along the Gulf Coast announced it was pulling out of South Carolina.

FedNat Insurance said in November that its finances had been stretched thin by a crippling ice storm in Texas in February 2021 and billions of dollars in property damage that Hurricane Ida caused when it hit Louisiana last summer.

FedNat's Palmetto State customers were to be transferred to other carriers in a process that was expected to take up to 18 months. In the interim, the company said it would renew their policies.