Florida Finds People Can’t Trust People’s Trust Insurance
One of Florida’s new startup property insurance companies that was expected to help pick up the slack when State Farm Florida exits the market has been barred from selling any new policies.
The company was found to be violating numerous insurance laws and regulations including operating with insufficient reinsurance, using unfiled rates, writing homes without inspecting them, not verifying mitigation discounts, distributing misleading marketing information, and even using unlicensed agents. It was also the object of complaints over claims submission, investigation and payment.
The company, which received its license in March 2008 with an initial capitalization of $10 million, was also found to be exceeding its permitted writings as set forth in the state-filed business plan by $5 million.
“The plan they submitted was for slow growth and careful underwriting,” said Edward Domansky, spokesman for the Florida Office of Insurance Regulation. “They were not doing those things.”
The state went onsite to investigate in February after allegations from agents and the Florida Association of Independent Agents about the company using unlicensed agents. That FOIR intervention uncovered other concerns and resulted in a March 17 consent order that bars the firm from writing new business until the state says it can. The order also gives the insurer 75 days to purchase more reinsurance to meet state requirements.
The state has questioned the insurance experience of the management team. The company, now being run by its founder, Michael Gold, has been told it must “immediately employ persons with significant insurance industry experience” to be president, vice president, chief financial officer and underwriting manager.
The insurer has been fined $150,000 and instructed to place $500,000 with the state’s Bureau of Collateral Management -bringing its account with this agency to $800,000.
Domansky said FOIR does not believe the company is in financial trouble, especially now that the state has stopped it from writing new business.
The company has prided itself on being able to offer low-priced policies because it doesn’t pay “high-commissioned” sales agents. But competitors say it offers lower prices by selling slimmed down-policies without certain coverages homeowners expect.
Domansky, acknowledging that the violations are “significant,” said the penalties were “appropriate” and not influenced by FOIR’s hope that domestic insurers like People’s Trust will write more property insurance business. He said the regulatory action proves FOIR is watching carriers closely.
Gold told The Associated Press that his company is committed to satisfying the remaining requirements quickly. “Achieving full compliance will ultimately make us a stronger organization and we look forward to again providing Floridians cost-effective insurance coverage,” he said.