Florida’s insurance market has changed dramatically over the last several years. As many national carriers reduced exposure or exited portions of the state, regional Florida-based insurers became a critical part of maintaining available coverage options for homeowners.
Sometimes, a question we receive from lenders and closing teams is:
“Is a Demotech-rated carrier acceptable for mortgage purposes?”
The answer is yes, provided the carrier meets the required rating threshold established by Fannie Mae and Freddie Mac.
This resource is intended to provide official source documentation and clarity surrounding Demotech-rated insurers and their acceptability in the mortgage marketplace.
Key Points
Both Fannie Mae and Freddie Mac officially recognize Demotech Financial Stability Ratings (FSRs).
A carrier with Demotech Financial Stability Rating of “A” or better
meets current agency guideline requirements for acceptable property insurance carriers.
Official Fannie Mae Guidance
Fannie Mae’s Selling Guide specifically lists Demotech as an approved rating provider.
Fannie Mae Selling Guide B7-3-01, Fannie Mae states:
“Demotech, Inc. ‘A’ or better Insurance Financial Stability Rating”
Official source:
Fannie Mae Selling Guide B7-3-01
Official Freddie Mac Guidance
Freddie Mac’s Seller/Servicer Guide also specifically recognizes Demotech ratings.
Freddie Mac Guide Section 4703.1, Freddie Mac states:
“For an insurer rated by Demotech, Inc., a minimum Financial Stability Rating of A…”
Official source:
Freddie Mac Guide Section 4703.1
Historical Acceptance of Demotech
Demotech has been recognized by the secondary mortgage market for decades.
Historical references include:
- Fannie Mae acceptance of Demotech ratings beginning in 1989
- Freddie Mac acceptance beginning in 1990
Sources:
Supporting references: (Demotech)
Important Clarification for Lenders
A Demotech-rated carrier is not automatically “non-admitted,” “unacceptable,” or “ineligible” simply because it does not carry an AM Best rating.
Fannie Mae and Freddie Mac recognize multiple approved rating agencies, including:
- AM Best
- Demotech
- KBRA (Kroll Bond Rating Agency)
- S&P Global
A carrier only needs to satisfy the minimum requirement under one accepted rating organization.
Fannie Mae source:
Fannie Mae Approved Rating Categories
Additional References
Florida Office of Insurance Regulation Advisory
Florida OIR Industry Advisory on Demotech & Mortgage Guidelines
(Flofr)
Freddie Mac Bulletin Expanding Eligible Rating Providers
Freddie Mac Bulletin 2023-4
(Freddie Mac Guide)
Demotech Background & SEC Recognition
Demotech Overview & Recognition
(Demotech)
Summary
Florida’s insurance market continues to evolve, but Demotech-rated carriers remain an officially recognized and accepted solution within current Fannie Mae and Freddie Mac guidelines.
As an independent agency, Ricci Insurance Group works closely with carriers, underwriting partners, lenders, and clients to help ensure coverage solutions align with both:
- insurance protection needs, and
- mortgage compliance requirements.
If your team has questions about a specific carrier, rating, or eligibility concern, we are always happy to help review the details together.
