Judge orders Southern Family rehabilitation

Leon County, Fla. Circuit Court Judge Thomas Bateman has ordered Southern Family Insurance Co., one of three financially-troubled property insurers of the Tampa-based Poe Financial Group into rehabilitation.

To ensure the policyholders are protected this hurricane season, Tom Gallagher, Florida’s CFO, plans to petition the court to allow policyholders unable to secure coverage in the private market to automatically transition to Citizens Property Insurance Corporation by July 1.

Bateman appointed the Department of Financial Services as receiver for Southern Family Insurance Company. As receiver for a company in rehabilitation, the department takes over the insurer’s operations and marshals the company’s resources to pay outstanding claims.

Florida’s Consumer Services representatives and Poe officials met April 21 to discuss how to reduce consumer complaints about the firm and its subsidiaries, Atlantic Preferred Insurance Co., Southern Family Insurance Co. and Florida Preferred Insurance Co.

“We met in continuing meetings with Poe. It was a productive meeting and company officials agreed to work out the claims they still have and about which we have received calls,” Bob Lotane, Department of Financial Services press secretary, told Insurance Journal after the April 21 meeting.

“One thing that we have seen that is of concern is that the actual number of open claims had increased to 286 from 254 when we last met April 14,” Lotane said.

During a recent two-week period, DFS received 169 consumer complaints about Poe. Poe was once the third-largest homeowner insurer in the state.

“We are also encouraged because they are continuing to resolve open claims in less than 60 days,” explained Lotane. “We do not like to see the total number go up, so we are going to continue to aggressively monitor their performance, work with them to make sure claims are resolved and that they get these people taken care of.”

Lotane said four people had called in to complain that they still have unrepaired hurricane damage and yet they are being non-renewed.

“It’s quite confusing to us,” Lotane said. “As part of the wide-ranging bill that passed the Florida Legislature last year, you can not nonrenew people with hurricane damage until 90 days after it is fixed.”

Pre-scheduled meeting

The April 21 meeting with Poe was already scheduled with the Division of Consumer Services.

“When this happens, we set up regular meetings,” Lotane said. “We generally set up regular meetings and develop an action plan to take care of the problem.”

He said the meetings are an ongoing process that officials have been going through with Poe to make sure people are being treated correctly.

Atlantic Insurance recently announced that as of July 13 it will begin to cancel coverage for 140,000 Florida homeowners, right in the middle of the 2006 hurricane season. At the time of the announcement it indicated the cancellations were necessary to curb its risks after dramatic losses from 2004 and 2005 hurricanes.

The announcement followed a similar one by Poe a few weeks before, during which the company said Southern Family Insurance would stop issuing or renewing policies in June.

Poe had over $2 billion of gross losses and more than 125,000 claims from the 2004 and 2005 hurricane seasons. In its announcement, it said it was announcing “some necessary underwriting action regarding its homeowner and commercial lines business.

Poe’s homeowners companies, Florida Preferred and Atlantic Preferred, are estimated to have some 300,000 policies, while Southern Family, which writes condominium associations, is believed to have over 1,500 policies.

At the end of 2005, Poe carried about 325,000 homeowner and condominium policies. After the cancellations, it will have 145,000 policies in the state.

Topics Florida Legislation Claims Homeowners Hurricane