Florida Commercial Insurer Capacity Insurance Now in Runoff, OIR Order Says

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Less than a year after it announced it would stop writing new business in Florida, commercial carrier Capacity Insurance has been placed under administrative supervision and is now in an orderly runoff.

The Florida Office of Insurance Regulation said in a consent order that Sunrise, Florida-based Capacity, part of the Peak6 Insurtech group of companies, said in January that it was unable to maintain required surplus levels.

“The Office has determined that grounds exist for Capacity to be placed in administrative supervision for the purpose of effectuating an orderly wind-down of its remaining liabilities, safeguarding its assets and protecting the interests of policyholders, claimants and the public,” the March 3 consent order reads.

Capacity Insurance was established in Florida in 1989 as a strictly commercial lines property insurer, specializing in mercantile, offices, gas stations, churches, contractors, funeral homes and other businesses. It had just about 2,700 policies in force as of last year.

In 2009, Capacity was acquired by Team Focus Insurance Group, part of the decades-old managing general agency, the MacNeil Group, based in Sunrise, Florida. In 2021, Team Focus was acquired by Peak6 InsurTech and investment firm, according to news reports.

By June 2022, Capacity announced that its financial outlook in Florida had darkened and it would stop writing new business in the state. The AM Best rating firm withdrew its financial strength rating after the insurer said it no longer wished to participate.

Since then, things have not improved. The company was required to file a runoff plan last month, according to the consent order signed by Florida Insurance Commissioner Michael Yaworsky.

The administrative supervision is for 120 days, until early July, but may be extended for 60-day increments.

A spokesman for Peak6 said last summer that Capacity had received significant changes in the preceding 18 months.

“Over the past year, the Florida market has been extremely difficult, especially in the reinsurance arena, further decreasing the profitability of Capacity Insurance,” a statement from the company said at the time.

The news may be seen as another indicator that Florida’s property insurance market continues to be under stress, despite at least a half-dozen measures adopted by Florida lawmakers in the last three years that were designed to limit litigation, roof claims and loss adjustment expenses for carriers.

Some 10 Florida insurers have been deemed insolvent since late 2021. The latest carrier to place itself in an orderly runoff was United Property & Casualty Insurance Co., in August 2022. But by February of this year, UPC had become insolvent and is now being liquidated.

The Capacity consent order did not indicate which carriers may assume the remaining Capacity policies.

While under supervision, Capacity may not terminate any policies, except for nonpayment of premiums; dispose of any assets; withdraw any of its bank accounts; transfer any of its property; nor waste assets or expend funds of more than $10,000 without approval from OIR, except in the normal course of business.

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