Glossary

Demotech rating

A financial strength grade from an independent firm that rates mostly small and regional property insurers, often those AM Best and S&P do not cover.

Also called: Demotech Financial Stability Rating, Demotech FSR, Demotech A rating

A Demotech rating is a Financial Stability Rating issued by Demotech, Inc. The scale runs A″ and A′ (both labeled Unsurpassed), then A (Exceptional), S (Substantial) and M (Moderate). L means the insurer is licensed but does not qualify for a rating, and NR means not rated. Demotech's definitions tie each grade to how many insurers at that level it expects to still have positive surplus 18 months later: at least 97% for an A, for example.

The grade is an opinion on whether an insurer can stay solvent through economic and underwriting cycles, weighted toward surplus, leverage and reserves. It says nothing about claim service or price, and it is not the same scale as AM Best's. Fannie Mae's Selling Guide (B7-3-01, December 2022 revision) accepts a Demotech A or better, which is a main reason lenders accept policies from Demotech-rated carriers.

Many newer and regional home insurers in coastal states carry Demotech grades rather than an AM Best letter. Confirm the current grade and its date in Demotech's published rating notifications, and read how Demotech ratings work for Florida insurers and how the four rating agencies compare. A rating lowers the odds of failure; it does not remove them.

Last reviewed October 10, 2026

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Related terms

Financial strength rating An independent agency's grade of an insurer's ability to meet its obligations and pay claims, issued by firms such as AM Best, S&P, Moody's, Fitch and Demotech. AM Best rating The letter grade, from A++ to D, that the insurance rating agency AM Best assigns to an insurer's ability to meet its ongoing policy obligations. Policyholder surplus An insurer's assets minus its liabilities under statutory accounting, the capital cushion that absorbs losses beyond its reserves and premiums. Insolvency The condition of an insurer that cannot pay its claims and debts as they come due, or whose liabilities exceed its assets or required capital. Guaranty fund A state safety net, financed by charges on licensed insurers, that pays covered claims up to a cap when an insurer is declared insolvent.

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Depopulation and takeout offers from state insurers of last resort How Citizens-style plans move policies to private insurers, what a takeout letter means, the Florida 20% rule, and how to decide whether to accept or opt out. Demotech ratings and Florida's insurers Why most Florida home insurers carry Demotech ratings, what an A (Exceptional) means, how lenders treat it, the 2022 downgrades and the criticism. Financial strength ratings: AM Best, S&P, Moody's and Demotech What insurer financial strength ratings measure, how the AM Best, S&P, Moody's, Fitch, KBRA and Demotech scales differ, and how to check yours. Florida's domestic home insurers: who they are Who Florida's home-grown insurers are, how Citizens takeouts and reinsurance shaped them, the 2021-2023 failures, and how to judge the one on your policy. Florida's home insurance market: what happened and what changed How Florida's home insurance market broke between 2019 and 2023, what the reforms did, and where prices, Citizens and new insurers stand as of October 2026. How to buy homeowners insurance, step by step Price the rebuild, gather the facts insurers ask for, get matching quotes, vet the company, read the draft declarations page and bind coverage before closing.

Related insurers

Allied Trust Insurance Coastal homeowners insurer founded in 2015 and managed from Tampa that sells through independent agents in Louisiana, Texas, North Carolina and South Carolina. American Integrity Insurance Tampa homeowners insurer founded in 2006 and public on the NYSE since 2025; sold by independent agents in Florida, Georgia and the Carolinas. American Traditions Insurance Pinellas Park, Florida insurer founded in 2006 for manufactured homes, now also writing homeowners and condo policies through independent agents; Demotech A. Auros and Interboro (SageSure carrier partners) Two Demotech-rated SageSure carriers: Auros, a policyholder-owned reciprocal in Louisiana, Mississippi and Texas, and Interboro, a century-old New York insurer. Branch Insurance Columbus, Ohio insurtech founded in 2017 that sells bundled home and auto insurance online and through agents, mostly via its member-owned reciprocal exchange. Cypress Property & Casualty Jacksonville, Demotech-rated insurer selling homeowners, condo and rental policies through agents in Florida and Texas, with a deductible installment plan.

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