Likewise , the latest rule change has caused “ uncertainty and apprehension ” as the rule implementation date approaches , the NAMIC and Big I letter said . •
Florida court rulings also have eased the replacement requirement in some cases .
In Kentucky last fall , the state Department of Insurance also weighed in on the issue . It posted an advisory opinion , essentially allowing insurers to avoid full roof replacements if the same type of shingle is used for repairs , even if the new shingles don ’ t exactly match the old ones in color .
Grande , of NAMIC , speculated that the FHFA may have had good intentions to protect homeowners , but that the agency did not consult with enough experts in the insurance world . Perhaps regulatory officials had heard from consumer groups that some people weren ’ t getting full replacement value from insurers when their homes were damaged , and the agency wanted to help assist residents , Grande noted .
“ That ’ s a nice sentiment but it was horribly ignorant and wrong ,” he said . “ It ’ s weird that no one in the food chain caught that before the guidelines were published .”
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removing ACV coverage undermines a choice that many homeowners have embraced ...”
Removing ACV coverage undermines a choice that many homeowners have embraced as a way to reduce premium increases in recent years , he and Big I ’ s Riedel pointed out .
A Fannie Mae official said that the clarifications “ were intended to help assure borrowers have sufficient property coverage in the event of a loss and promote sustainable homeownership .”
Replacement costs also have been a tricky issue for some insurance agents in recent years . An insurance carrier ’ s replacement cost estimator tools are often considered proprietary , and Florida statutes and agents ’ contracts bar lenders from requiring agents to provide the cost estimators , explained B . G . Murphy with the Florida Association of Insurance Agents ( FAIA ).
“ The new guidance to sellers / servicers of Fannie / Freddie-backed mortgages will likely reignite this problem for Florida ’ s independent insurance agents ,” Murphy wrote in a blog post last week .
It is unclear the number of homeowners with mortgages in Florida and elsewhere that have opted for actual cash value policies . Florida regulators and officials with the state-created Citizens Property Insurance Corp . could not be reached Monday .
This is not the first time Fannie and Freddie have shaken the Florida housing and insurance markets .
In early 2022 , the corporations began requiring lending institutions to evaluate the condition of condominium buildings before approving loans , in the aftermath of the Champlain Towers South collapse that killed 98 people .
A year later , some Florida-domiciled carriers withdrew from the Demotech rating firm ’ s financial stability rating system . But Freddie Mac caused some consternation when it temporarily delayed approval of another rating firm ’ s ranking system for insurers .
Likewise , the latest rule change has caused “ uncertainty and apprehension ” as the rule implementation date approaches , the NAMIC and Big I letter said . •
Rabb is Southeast Editor for Insurance Journal . He is a long-time newspaper man in the Deep South ; also covered workers ' comp insurance issues for a trade publication for a few years .
24 KANSAS INSURANCE AGENT & BROKER