Policyholders will have to scramble to find a new insurer during hurricane season, which began last Wednesday.
Regulators have "decided that it is in the policyholder’s best interest to cancel all of its existing policies," Argus wrote in a letter that is going out immediately to policyholders, agents and mortgage companies.
The company, owned by United Automobile Insurance Co., had previously planned to wait until the policies were up for renewal.
But Insurance Commissioner Kevin McCarty wrote in an order that his office determined the company doesn't have enough reinsurance, or insurance for insurers, so allowing Argus to keep operating would be "hazardous." Argus reported in its quarterly financial statement that it only has about $554,000 more in claims-paying reserves than the $4 million required, according to the order. The company also planned to buy enough reinsurance to cover a storm that hits once every 100 years, instead of 150 or 200 years, like some other insurers and an outside auditor found in early May that the company underestimated its claims-related losses.
Argus will warn policyholders 45 days before dropping them and it will process refund checks for unearned premiums in the next 15 days and mail them to customers' homes, the insurer wrote in a letter to policyholders. Argus encourages customers to contact their insurance agent or the Florida Market Assistance Plan at 800-524-9023 or www.fmap.org to find coverage with another insurer.
The insurer will still buy reinsurance from its parent company, United Auto, and be responsible for using some of its claims-paying reserves to pay for storm damage if there is a hurricane this year, according to the order.
Four small Florida insurers folded in 2009 and early 2010 and half a dozen home insurers asked to drop policies last year.
A property and casualty insurer that provides liability insurance coverage in Florida, National Insurance Co. in Coral Gables, could also fold. Regulators in Puerto Rico ordered the company into rehabilitation, according to rating agency A.M. Best.
A.M. Best downgraded the health of its subsidiary, National Group Insurance Co., to "poor" last Tuesday.
Office of Insurance Regulation Spokesman Jack McDermott said the insurer does not have any residential policies in the state and he does not know how many commercial policies it has.
"As part of the rehabilitation process, all members of the board of directors, the chief executive officer and the chief operating officer have resigned their positions," A.M. Best wrote about the parent. "Reorganization strategies have started immediately, and include review of cost control policies, as well as discussions with general agents and producers. At this time, all existing reinsurance contracts remain in force."