For Florida home insurance customers, the hits just keep coming.

On top of a series of steep rate increases over the past few years, now come surcharges to clean up messes left behind by failed insurance companies.

Orlando-based St. Johns Insurance Co. — one of the 10 largest Florida insurers with more than 204,600 policies statewide as recently as 2019 — went into receivership late last month after losing its financial stability rating by analysis firm Demotech.

A new startup, Tampa-based Slide Insurance Co., agreed to take over 147,000 policies at the same cost and with the same coverage through the end of those policies’ terms.

While Slide starts its relationship with those homeowners with a clean slate, the costs of any claims and litigation filed before the takeover will be paid by the Florida Insurance Guaranty Association (FIGA).

And guess where FIGA gets the money it needs to cover those costs?

If you said “all of the other homeowners in the state who buy property insurance as well as some other forms of insurance,” treat yourself to a new pen set you can use to sign your next batch of insurance documents.

On Feb. 28, FIGA’s board of directors approved a 1.3% assessment on the premium cost of all policies sold in Florida — not just for home insurance, but for several other insurance types, including aircraft; boiler & machinery; burglary and theft; non-auto commercial insurance; crop insurance; inland marine and watercraft; medical malpractice; product liability and private flood.

FIGA was created by the state Legislature in 1970 to handle claims of insolvent property and casualty companies. In 2006 and 2007, it imposed three 2% surcharges to raise $750 million to cover costs left after the failure of three property insurance companies owned by the Tampa-based Poe Financial Group, which was bankrupted by claims from numerous hurricanes in 2004 and 2005.

The St. Johns assessment, which will raise $190 million, will be levied if the Florida Office of Insurance Regulation approves it on March 15. Without the assessment, FIGA would end the year $214 million in debt, according to an analysis presented to the FIGA board.

It will be the second assessment levied by FIGA in less than six months. In October, FIGA levied a .07% assessment to cover the legacy costs of failed insurers Gulfstream Insurance and American Capital Assurance Corp. Insurers were authorized to collect those assessments for policies newly written or renewed in 2022.

The St. Johns assessment would apply to policies newly written or renewed between July 1, 2022, and June 30, 2023.

So anyone buying home insurance and any of the other eligible insurance types between July and December will pay a 2% surcharge on all of those policies.

That might not seem like a high number, but for a homeowner paying an annual premium of $5,000, that 2% is $100 that could have been spent on other needs.

Get ready for more insurance company failures

And more insurance company failures are on the way.

Avatar Property & Casualty, which had 38,282 residential and commercial policies in the fourth quarter of 2021, also lost its Demotech financial stability rating in February. On Friday, the Department of Financial Services asked Leon County’s circuit court for authority to oversee the company’s liquidation.

Another surcharge would be imposed the pay for that company’s legacy costs, said Paul Handerhan, president of the consumer-focused Federal Association for Insurance Reform, which is based in Fort Lauderdale.

Insurance executives expect that some cash-strapped companies won’t be able to raise enough capital to purchase enough reinsurance — insurance that insurers buy to ensure they can pay all claims after a catastrophe — before the upcoming June 1 deadline that coincides with the start of hurricane season.

Some insurers buy reinsurance from as many as 20 companies to ensure they cover all required scenarios, he said. Failure to cover all of those obligations means they, too, would lose their financial stability ratings and be forced to dissolve and transfer their policies — either to a willing recipient like Slide or to the state-owned Citizens Property Insurance Corp., the so-called insurer of last resort.

Want to guess what that would mean? More special assessments.

“At the end of the day, if a company is going to go insolvent, regardless of who picks them up, costs have to be paid,” Handerhan said. “All of those legacy claims still have to go to FIGA.”

And the consumer always gets FIGA’s bill.

Locke Burt, founder and CEO of Ormond Beach-based Security First Insurance, sees more failures over the horizon. “What’s going to happen when the next company goes into liquidation? The story is not over. There’s more to come,” he said.

Burt blames the troubled financial state of the industry on the Florida Legislature’s failure so far to pass meaningful reforms to rein in predatory repair contractors and attorneys.

Insurers wary of surcharges too

But it’s not only consumers concerned about FIGA assessments. To cover the St. Johns costs, FIGA’s board of directors recently voted to require all of the insurance companies who collect surcharges from their customers to pay those surcharges upfront by April 15 and get reimbursed for those costs later. Several companies will have to front millions of dollars.

Some insurance company executives cried foul, saying they didn’t think it fair that existing carriers are being forced to turn over such large amounts of cash to support a transaction that ultimately strengthens a competitor, Slide, which opened for business in October. Slide was founded by Bruce Lucas, who founded Heritage Property & Casualty in 2012 by taking out Citizens policies. He resigned as Heritage’s CEO in 2020.

Handerhan said the cash outlay could leave some financially troubled insurers without enough capital to meet their reinsurance obligations by June 1.

FIGA’s board agreed to meet on Tuesday to discuss potential alternatives, several sources said.