A judge named a receiver for Tampa-based property insurer Avatar Property & Casualty Insurance Co. for “purposes of liquidation.” Avatar has 37K policies.

TALLAHASSEE, Fla. – A Leon County circuit judge issued an order placing a Tampa-based property insurer into state receivership, as problems continue to mount for homeowners and insurance companies.

Judge John Cooper on Monday appointed the Florida Department of Financial Services as receiver for the “purposes of liquidation” of Avatar Property & Casualty Insurance Co.

The order came after the department filed a petition March 4 seeking appointment as receiver, saying that Avatar was insolvent – about a week after another circuit judge appointed the department as receiver for Orlando-based St. Johns Insurance Co., which also was considered insolvent.

Devin Galetta, communications director for the Department of Financial Services, said Avatar had about 37,000 policies in Florida as of March 2. The department has contracted with a company, Examination Resources, LLC, to serve as a special deputy receiver.

In notices to policyholders and agents dated Monday, the department said Avatar policies will be canceled as of April 13, with claims for damages before that date handled by a program known as the Florida Insurance Guaranty Association.

“If you have not already discussed this matter with your agent, please contact your agent immediately to make sure that you get new coverage to replace your Avatar policy,” said the notice to policyholders, posted on a website about the liquidation. “Your agent is in the best position to advise you as to your insurance options.”

Galetta said in an email that the department has “employed, with court approval, a special deputy receiver to communicate with policyholders on next steps and will work through the normal guaranty association process to cover existing claims. To further protect policyholders, any opportunities for policies to be transferred to other companies to prevent loss of coverage will be explored.”

The Avatar situation is in contrast to the receivership of St. Johns Insurance Co., whose policies were transferred to Slide Insurance Co.

The receivership also comes as the number of policies in the state-backed Citizens Property Insurance Corp. continues to increase by thousands a week. Citizens, which was created as an insurer of last resort, had 792,616 policies as of the end of February.

Michael Peltier, a Citizens spokesman, said Tuesday that Citizens expects to get some policies because of the Avatar liquidation but that many likely will be picked up by private insurers.

In a March 2 letter to state Chief Financial Officer Jimmy Patronis about pursuing the Avatar receivership, Insurance Commissioner David Altmaier said the company had agreed to the move and acknowledged that it was insolvent.

“OIR (the Office of Insurance Regulation) has worked closely with Avatar Property & Casualty Insurance Company to facilitate options for consumers so they have access to continuous coverage in the voluntary market,” Altmaier wrote. “While no insurer has expressed an interest in providing coverage to all of Avatar’s policyholders, several insurers have expressed an interest in potentially providing coverage to some of Avatar’s policyholders through direct solicitation by their appointed agents.”

The Avatar receivership is the latest evidence of problems in the property-insurance market, as companies shed policies and seek large rate increases to try to reduce financial risks.

State lawmakers considered proposals to bolster the market and help shift policies out of Citizens to private insurers, but the Senate and House could not reach agreement on a plan before the annual legislative session ended Monday.

Source: News Service of Florida

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Author: kerrys