US Lawmakers Launch Probe Into Key Insurance Rating Firm in Florida
Three Democratic Senators say Demotech’s assessments “raise profound governance and reliability concerns.”
A flooded street after Hurricane Milton in St. Pete Beach, Florida, on Oct. 10, 2024.
Photographer: Tristan Wheelock/BloombergThree US senators opened an inquiry into insurance ratings firm Demotech and whether its assessments may be exposing Fannie Mae and Freddie Mac — and ultimately taxpayers — to growing risks tied to climate-driven insurer failures.
In a letter sent Tuesday to Fannie Mae acting Chief Executive Officer Peter Akwaboah and Freddie Mac CEO Kenny Smith, the three Democratic lawmakers questioned why the government-backed mortgage giants continue to accept Demotech ratings as sufficient proof of insurer financial strength, despite evidence that insurers carrying those ratings have failed at unusually high rates. In a separate letter, they pressed Demotech on its own finances and why, in 2022, it suddenly threatened to downgrade the ratings of up to 27 insurance companies.