United Property and Casualty Insurance (“UPC Insurance”) issued an agent bulletin on Monday, May 24, 2021, advising its approximately two hundred agencies in Massachusetts that it will no longer accept new business “effective 5/31/2021 and after.”
The May 31, 2021, termination date for new business arises out the expiration of a quota share arrangement as part of UPC Insurance selling its personal lines renewal rights in Massachusetts, Connecticut, Rhode Island, and New Jersey to the HCI Group Inc. (HCI).
Effective December 31, 2020, HCI entered into a property quota share reinsurance agreement by which UPC Insurance ceded to HCI a 69.5% quota share of all its homeowners business in Connecticut, Massachusetts, New Jersey, and Rhode Island on all its in-force, new and renewal basis for the period from December 31, 2020, through May 31, 2021.
When added to UPC Insurance’s then-existing 30.5% quota share reinsurance agreement, this reinsurance agreement with HCI effectively reinsured all UPC Insurance’s loss exposure and removed the company from any risk associated with these states between January 1, 2021, and May 31, 2020.
The transaction with HCI also involved UPC Insurance selling HCI its renewal rights for Massachusetts and the three other states’ personal lines homeowners policies. The renewal rights sale agreement apparently contemplated HCI having an affiliate company operating by June 1, 2021, to start renewing expiring UPC Insurance policies.
Based on Agency Checklists’ latest market share report on the top homeowner insurance companies in Massachusetts, UPC is currently the 14th largest with written premium totalling $49,895,412 in 2020, representing a 2.05% market share.
HCI affiliate approved but not fully operational in Massachusetts yet
On May 21, 2021, HCI’s subsidiary, TypTap Insurance, officially announced that it had received approval from the Massachusetts Division of Insurance to write homeowners policies. However, before the company can start exercising the renewal rights purchased from UPC Insurance, the company must have its rates and forms approved by the division.
While UPC Insurance will stop accepting new business as of May 31, until TypTap Insurance begins exercising UPC Insurance’s renewal rights, UPC Insurance will be conducting business as usual on renewals.
Also, once TypTap Insurance becomes fully operational in Massachusetts, any present UPC Insurance agents may expect to either receive offers for agency contracts or, in the alternative, servicing agreements for the policies they had placed with UPC Insurance.
UPC Insurance agents with questions urged to contact their marketing representatives
The agency bulletin advises any agents to contact their current Territory Sales Manager during this transition period with questions about their current business with UPC Insurance.
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The agents’ notice from UPC Insurance also advised that after May 31, 2021, Griston Claim Management, a subsidiary of HCI, would manage all claims on existing UPC Insurance policies with a loss date on or after June 1, 2021. The contact number given in the notice for Griston was 888-475-0222.
TypTap started in Florida in 2016 and now is expanding nationwide
HCI founded TypTap Insurance in 2016 with the mission to utilize technology, data, and data analytics to simplify the insurance experience. TypTap is a rapidly growing, technology-driven insurance company that provides homeowners and flood insurance in Florida with plans to expand its operations nationwide. In Florida, TypTap Insurance has organically grown its gross written premium from $2.5 million in 2016 to $105 million by 2020.
TypTap Insurance markets its products through independent agencies using an innovative, proprietary, online platform to quote and bind policies quickly and efficiently. It also has powerful algorithms, enabled by artificial intelligence, designed to identify policies that deliver profitable results while mitigating risk.
TypTap Insurance issues $100 million in preferred stock to finance its expansion using independent agents
In October 2020, as part of a nationwide expansion plan, TypTap began applying for approval to offer homeowners coverage in twenty-three states outside of Florida. Since then, TypTap has received approvals from ten states, including Massachusetts.
On February 26, 2021, TypTap Insurance completed an investment transaction to expand its operations by issuing nine million voting shares and one million non-voting shares of preferred stock to a fund associated with Centerbridge Partners, a New York private equity firm. The ten million shares of preferred stock TypTap Insurance issued had a par value of $10 per share, which generated $100,000,000 in additional capital for the insurer’s expansion plans.
TypTap attributes its growth to its success in using internally developed proprietary technology to underwrite, select and write policies efficiently, and identify independent agents who will work with the company in applying its technology to evaluate potential risks down to the house level.
About HCI Group
HCI Group, Inc. owns subsidiaries engaged in diverse yet complementary business activities, including homeowners insurance, reinsurance, real estate, and information technology. The company’s largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., is a leading provider of property and casualty insurance in the state of Florida. HCI’s other major subsidiary, TypTap Insurance, offers homeowners and private flood insurance in Florida and is in the process of expanding into other states nationwide.
HCI’s common shares trade on the New York Stock Exchange under the ticker symbol “HCI” and in the company’s stock is included in the Russell 2000 and S&P SmallCap 600 Index.
