What Happened to Windhaven Insurance? Understanding the Company’s Closure

If you had insurance through Windhaven Insurance Company (WIC), you may be wondering – is Windhaven Insurance still in business? Unfortunately, the answer is no. WIC was ordered into liquidation in early 2020 and is no longer operating

As someone who has covered the insurance industry for years, I want to provide some background on Windhaven’s closure, explain what it means for policyholders, and look at what options are available going forward. Stick with me to get the full story!

Windhaven Insurance Ordered into Liquidation

First a quick recap of key events in Windhaven’s demise

• WIC was placed into rehabilitation by Florida regulators in December 2019 amid financial instability.

• Soon after, the company was declared insolvent and ordered into liquidation on January 6, 2020.

• The Florida Department of Financial Services (DFS) was appointed as receiver to take control of Windhaven’s assets and policies.

• All WIC policies were cancelled effective February 5, 2020 as part of the liquidation.

So in simple terms, Windhaven Insurance no longer exists as an operating entity. The DFDS has taken over the company’s assets and is winding down remaining affairs.

Why Did This Happen?

You may be wondering why Windhaven failed. The insurance business is complex and many factors likely contributed, but a few possibilities stand out:

• Rapid Growth – Windhaven grew very quickly, going from zero to over 70,000 policies in around 15 years. This fast expansion could have stressed operations.

• Pricing & Reserves – The company may have underpriced policies and failed to set aside sufficient reserves to pay future claims.

• Investments – Insurers invest premiums to generate income. If Windhaven’s investments performed poorly, it would have strained finances.

• Management – Perhaps inexperience or poor decisions from Windhaven’s leadership team also played a role.

Most insurer insolvencies result from some combination of insufficient pricing, inadequate reserves, and ineffective management. Based on Windhaven’s rapid growth, it seems likely they fell victim to classic errors.

What Does This Mean for Policyholders?

Now you may be wondering – what does Windhaven’s liquidation mean for its former customers? Here are some key implications:

• Policies Cancelled – All Windhaven policies were cancelled effective February 5, 2020. So there is no longer any active coverage.

• Claims Unpaid – Any open claims or future claims under Windhaven policies will not be paid out. Only a small fraction of dollars will be recovered through the liquidation process.

• Seek New Coverage – Former Windhaven policyholders need to secure new insurance right away to have protection. Quickly contact an independent agent to explore options.

• Proof of Prior Insurance – Have your Windhaven policy documents handy. New insurers will want proof you had prior coverage.

• Higher Rates Likely – Since Windhaven served high-risk drivers, premiums with a new insurer may be much higher unfortunately.

• Lessons Learned – In the future, be very selective when choosing insurance companies. Only use established insurers with strong financial ratings.

Are Any Windhaven Companies Still Operating?

Windhaven Insurance Holdings operated several insurance entities and subsidiaries. While WIC is in liquidation, some related companies apparently continue operating for now:

• Windhaven National Insurance Co.
• The Hearth Insurance Group
• ClutchAnalytics

However, based on recent asset auctions and closures, these affiliates also seem to be winding down or restructuring. I do not recommend relying on them for coverage. Their future is highly uncertain at this point.

What Options Do Former Policyholders Have?

Although Windhaven’s closure creates hardship for former customers, all is not lost. There are still options for getting replacement insurance:

• Florida Market Assistance Plan (FMAP) – This state program provides coverage for high-risk drivers unable to find insurance. It is probably the best option, though still expensive.

• Non-standard insurers – Various companies like Direct General, Access Insurance, and SECURA specialize in high-risk drivers. Shop around for the best rate.

• Assigned risk plans – These state programs assign high-risk applicants to insurers. However, limited availability makes them tough to secure.

• Low mileage discounts – Driving fewer miles may help lower premiums a bit. Be honest when estimating annual mileage.

• Raise deductibles – Choosing higher deductibles reduces rates somewhat. Just be sure you can afford the out-of-pocket costs.

• Seek discounts – Taking defensive driver courses or adding anti-theft devices may qualify you for discounts with some insurers.

The bottom line is that Windhaven clients can still get coverage, but likely at higher rates unfortunately. Work with an independent agent to get quotes from various companies until you find the best option. And avoid tiny unknown insurers going forward!

Could Windhaven Have Been Saved?

It’s easy to Monday morning quarterback, but perhaps regulators could have taken steps to save Windhaven earlier:

• Closer financial monitoring and earlier intervention when problems arose.

• Work with the company on a risk-based capital plan to boost reserves.

• Allow sale of Windhaven’s policies to a more stable insurer.

• Impose tighter restrictions on rapid growth and risk concentration.

Strong regulation protects policyholders when insurers fail. But proactive steps can also sometimes prevent insolvencies altogether. Striking this balance is difficult but vital.

Lessons Learned for the Insurance Industry

Windhaven’s failure offers some critical lessons for insurance professionals as well:

• Carefully evaluate risk appetite and growth strategies.

• Maintain pricing discipline, even when competitors cut rates.

• Utilize available data to frequently stress test reserve adequacy.

• Keep a close eye on investment portfolio performance.

• Maintain solid reinsurance protections.

• Build a diverse, experienced management team.

• Maintain strong relationships with regulators.

Hopefully the industry takes these lessons to heart so we see fewer insolvencies going forward.