The filing did not detail how many policies Weston had, but the company stopped writing new policies on July 15 and stopped renewing policies on July 18. The Demotech ratings agency on Monday withdrew a financial-stability rating for Weston.

The company's customers will have to find coverage in a market where many private insurers have stopped writing policies and have dropped policyholders to stem financial losses. That likely will result in more policies going into the state-backed Citizens Insurance Corp., which was created as an insurer of last resort but has ballooned in size during the past two years.

Insurance Commissioner David Altmaier notified state Chief Financial Officer Jimmy Patronis on Tuesday about the Weston insolvency, leading to the Department of Financial Services' Division of Rehabilitation and Liquidation filing the court petition Thursday.

The filing listed a series of issues, including saying that Weston's "assets if made immediately available are insufficient to pay all of its liabilities." Also, it said Weston had not fully placed reinsurance for the 2022-2023 year. Reinsurance, which is backup coverage, plays a critical role in Florida, in part because of the threat of hurricanes.

"Therefore, respondent's (Weston's) continued operation is hazardous to policyholders, creditors and the public and receivership proceedings are appropriate pursuant to (state law)," the petition said.

The filings indicate the Office of Insurance Regulation had been monitoring Weston for more than two years. As an example, regulators issued a consent order in May 2020 that required Weston to file a "capital management plan" that, in part, included improving its financial liquidity.

Also, the company had net underwriting losses during the first three months of 2022 of nearly $12.2 million.

Gov. Ron DeSantis called a special legislative session in May to address problems in the property-insurance system, but companies have continued to struggle. Regulators scrambled last month after Demotech informed about 17 insurers that they could face ratings downgrades.

Financial ratings are important, in part, because mortgage-industry giants Fannie Mae and Freddie Mac require homes to be insured by financially sound companies. For insurers rated by Demotech, Fannie Mae and Freddie Mac require "A" ratings or better.

If insurers lose such ratings, homeowners could be forced to find other coverage. Demotech this week withdrew or downgraded ratings for five companies, including Weston.

The Office of Insurance Regulation announced a program last week that seeks to allow homeowners to maintain coverage if insurers get downgraded by Demotech.

That program involves Citizens Property Insurance acting as a financial backstop. Citizens is taking on a reinsurance role to help make sure claims get paid if private insurers go insolvent.

United Property & Casualty on Tuesday became the first insurer to participate in the program after a Demotech downgrade. Weston is not part of the program. Circuit Judge Angela Dempsey has been assigned to the Weston receivership case.

Related:

• 17 Florida property insurers face potential rating downgrade
• Citizens could hit 1.2 million policies this year