Tailrow Insurance Company Approved to Write Homeowners Policies in Florida

Florida homeowners may have a new option when it comes to purchasing property insurance thanks to a new startup. Tailrow Insurance Company is the first insurer to be approved by the Florida Office of Insurance Regulation since the state enacted legal reforms last year.

Tailrow’s application to become an authorized domestic insurer has been approved, allowing them to write multi-peril policies for homeowners. The company will be a fully-owned subsidiary of HCI Group, a publicly-traded company that also owns Homeowners Choice Insurance, TypTap Insurance Co., Exzeo, Greenleaf Capital, and reinsurance provider Claddaugh.

HCI Group was formed in 2006, just as financial losses from the 2005-2006 hurricane season prompted numerous national carriers to cease operations in the state. While the legislative reforms passed in 2021 will stabilize the insurance market in Florida, Tailrow’s plans were already in the works before the reforms were enacted.

HCI Group CEO Paresh Patel said that some of the $172.5 million in investment capital raised by HCI Group in April 2022 will be used to launch Tailrow. While much of the money was used to offset losses from Hurricane Ian, Patel said that the amount of money allocated for Tailrow has not yet been publicly disclosed.

The approval of Tailrow’s application is a positive development for Florida’s insurance market. Many insurers have reduced their policy counts in recent years, but the combination of policies held by Homeowners Choice and TypTap has grown from 130,496 at the end of 2019 to 150,241 at the end of 2022.

Tailrow’s approval is also an indication that the reforms passed last year are working. The reforms outlawed practices such as one-way attorney fees and assignment of benefits that have been blamed for causing financial losses and the dissolution of seven state-regulated carriers since 2020. These reforms have created a more stable environment for new insurers like Tailrow, who won’t face the same litigious environment as their competitors, which should drive down homeowner premiums.

Insurance Commissioner Michael Yaworsky said that the Office of Insurance Regulation would “continue to use all available resources to attract more insurance-related companies, jobs and capital to the Florida insurance market.” The Office of Insurance Regulation is committed to streamlining the regulatory process and providing guidance to insurers on what impacts they can expect from newly enacted reforms.

While Tailrow won’t be writing policies before the June 1 start of hurricane season, Patel said he expects the company to write new policies in oft-shunned South Florida. The company still has several important steps to take before opening for business, including filing rates and forms and getting them approved, getting approved by a financial strength ratings agency, and getting their technology system in place and signing up agents.

Despite the hurdles, industry officials are hopeful that Tailrow’s approval will create a path toward stability for the overall market. The approval of a new insurer like Tailrow will create more options for consumers to shop their home coverage, which should drive competitive pricing. With the backing of HCI Group’s financial resources and Florida experience, Tailrow has a good chance of success, and homeowners in Florida can look forward to having a new option when it comes to purchasing property insurance.