What happens when a carrier becomes insolvent
- State regulatory action: Florida Department of Financial Services (through the Office of Insurance Regulation) determines the carrier can't meet its obligations
- Receivership order: court enters an order placing the carrier into receivership
- Receiver appointed: typically the Florida Department of Financial Services or its designee
- Claim handling transfers: to the receiver or to the Florida Insurance Guaranty Association (FIGA)
What FIGA is
The Florida Insurance Guaranty Association (FIGA) is a state-mandated fund that covers certain claims from insolvent carriers. Funded by assessments on remaining active carriers in Florida.
FIGA handles:
- Covered claims up to statutory limits
- Claims from Florida policies of insolvent carriers
- Claims meeting specific criteria
What FIGA doesn't cover
- Claims above statutory caps (varies by claim type)
- Claims from non-admitted carriers (surplus lines)
- Claims already paid by the insolvent carrier
- Punitive damages
- Bad-faith damages
- Policyholder-specific deductibles
The FIGA process
Your claim transfers
Notice from the receiver explaining the transition. Your existing claim number typically changes to a FIGA number.
New handler
FIGA assigns claims to contracted third-party administrators. Different adjuster, different process, often slower.
Documentation
Everything you've submitted transfers. You may need to re-submit depending on the TPA.
Resolution
FIGA pays covered claims within the statutory caps.
What policyholders should do
Don't panic
Receivership doesn't mean claim denial. Coverage typically continues under FIGA for qualifying claims.
Continue documentation
Keep adding to the claim file. Nothing changes about your obligation to document.
Follow up proactively
FIGA processes are slower. Expect delays. Follow up in writing at intervals.
Preserve all correspondence
From both the insolvent carrier and FIGA. Documentation needs to span the transition.
Consider attorney consultation
Receivership creates complex legal environments. Attorney consultation may be warranted.
The FIGA caps
Statutory caps vary. As of current reform:
- Per-claim property coverage caps
- Per-claim ALE caps
- Policy-limit restrictions
Exceeding the cap means out-of-pocket. Review your specific situation with counsel.
If your claim was already in progress
- Prior payments generally hold
- Unpaid portions transition to FIGA
- Statutory deadlines continue running (clock doesn't pause)
- Supplemental filings should still be within the original 18-month window
Renewal and replacement
Your policy typically isn't extended by FIGA. You'll need to find replacement coverage at renewal (or before, if coverage lapses). Florida has many alternatives:
- Other private carriers
- Citizens Property Insurance
- Surplus lines
Recent Florida examples
Multiple Florida carriers have been placed into receivership since 2020. FIGA's role has grown substantially. The statutory framework has been stress-tested repeatedly.
How Ocean Point handles FIGA claims
- Documentation preservation through transitions
- Liaison with FIGA TPAs
- Scope documentation standards maintained
- Attorney coordination when warranted
- Track statutory caps and plan accordingly