For most of 2013, Tower Group International, Ltd. undercut many of its competitors with low prices.  However, now all companies involved with Tower are under review with negative implications, which includes Hermitage Insurance Company (quoted from Yahoo News).  Hermitage sold Tower’s insurance policies on the Gulf Coast, which includes Mobile and Baldwin County; Daphne, Fairhope, Spanish Fort, Foley, Gulf Shores, and Orange Beach among others.

Tower Group & Hermitage Downgrade

Now, however, many of their customers have been canceled, declined, replaced, or have received a notice that their insurance price has gone up.  Why has Hermitage’s prices gone up?  It’s because Tower Group has been downgraded.  Why has Tower been downgraded?  In short, they bit off more than they could chew; they sold more policies than they could afford to pay if those homes that they insured ended up with claims.

Don’t go with a company that could potentially become insolvent!  Make sure that your insurance policy providers are well known and trusted with a good long track record.  Heritage Insurance sells policies through Lloyd’s of London, the oldest and most trusted insurer in the world.  Prices have not gone up on our customers in at least the last 5 years.  Since their downgrade in late 2013, Heritage Insurance’s prices are lower, cheaper, and more affordable than Tower Hermitage.

When a new insurance company that hasn’t existed for long comes into the market, the only way for it to outsell the already dominant insurance companies is to beat their price.  After one or two years of selling policies, it hasn’t accumulated enough profit to pay claims if a hurricane hits as it so often does on the Gulf coast.  A.M. Best Co. reviewed Hermitage and declared that it’s financial strength wasn’t good enough to pay an epidemic of claims.  Now, Hermitage’s  only option is to either cancel, decline, or non-renew insurance with customers, or drastically increase the price for those same customers the next year.

The following is a list of companies who are affected by the downgrade:

CastlePoint Insurance Company

CastlePoint National Insurance Company

Tower Insurance Company of New York

Tower National Insurance Company

Preserver Insurance Company

North East Insurance Company

Hermitage Insurance Company

CastlePoint Florida Insurance Company

Kodiak Insurance Company

York Insurance Company of Maine

Massachusetts Homeland Insurance Company