On April 7, 2010, the Florida Office of Insurance Regulation declared Northern Capital Insurance Company, a Florida-based property insurer, to be “insolvent and in hazardous financial condition.” The company had been under the administrative supervision of the Office of Insurance Regulation since May 29, 2009. The company is expected to be placed into receivership and all of its policies are expected to be cancelled shortly after the entry of an order of liquidation.
Northern Capital was formed as a “take out” company to remove property insurance policies from the state-created Citizens Property Insurance Corp. The company took over approximately 14,000 Citizens policies in 2008 and 7,000 in 2009. It reported an underwriting loss of $25.6 million at the end of 2009 and an additional loss of $7.3 million in the first two months of 2010. By the time the company was declared insolvent, the Office of Insurance Regulation found that its surplus had shrunk to $3.9 million and its reserves were $6.4 million less than required.
Regulators blamed the insolvency on the company's large concentration of risk in South Florida.
The office had previously announced that another take out company, Magnolia Insurance Co., was in administrative supervision. Three Florida insurers were placed in receivership in 2009.
In a separate property insurance development, Gov. Crist threatened to veto any property insurance legislation that allows insurers to raise rates. “This is the last time that people need to have property insurance go up. If there is any legislation that comes to my desk that would do that, I will veto it and happily do so,” he said. Asked whether he thought legislators would override the veto, the governor said, “I can't imagine how many members of the House and Senate would want to override a veto that reduces property insurance. They would do so at their own peril.”
In 2009, Gov. Crist vetoed a bill that would have provided limited deregulation for property insurance rates. Several bills currently moving through the Legislature would allow limited rate increases without regulatory approval or would otherwise affect the calculation of property insurance rates.