Poe Financial Group Cancels New, Renewed Fla. Homeowners, Commercial Policies

Florida agents have been notified by Poe Financial Group that thousands of policyholders with its Southern Family Insurance Company will no longer be able to renew or insure new homeowner or commercial lines business.

The company said its other insurance companies, Atlantic Preferred Insurance Company and Florida Preferred Property Insurance Company will continue the renewal of homeowner accounts throughout the state, but for now will refrain from writing new business.

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.

“It should be no surprise that the activity from the 2004 and 2005 hurricane seasons has been substantial,” Jim Wurdeman, president and CEO said. “Through it all, our reinsurance and agent partners have been incredibly supportive.

“Our associates have worked long and hard, six and seven days-a-week, 10 to 12 hours per day for the better part of two hurricane seasons,” he said. “Their dedication has been and continues to be remarkable”

Wurderman said the underwriting action Poe is taking will not affect our response to policyholders that have current or future claims.

“Rather, we are taking necessary and appropriate action as stipulated by the Florida statutes and that are in the best interest to position the organization for the future.”

Agents knocking on doors

Susan Straker, Coral Insurance President and CEO, told Insurance Journal her Hollywood, Fla. homeowners insurance company is being deluged with calls from agents wanting to be appointed by her firm.

“We are appointing agents, but our objective is to limit our agency plant to 150 partner/agents, and right now we have 151,” Straker explained. She had dozens of applications on her desk and said she was receiving frequent phone calls from prospective agents.

“We are not a takeout company, so we don’t make sweeping appointments,” she said. “We get to know each agency and work closely with them.”

Straker explained that takeout companies, which remove policies from Citizens, frequently take the agent that has serviced the policy in the past. Their appointment is almost automatic. She explained that, as a voluntary writer, Coral carefully selects agents who specialize in homeowners and know the field very well.

Agents who write homeowners policies with Poe’s Atlantic Preferred and Florida Preferred have been contacting Straker to be appointed since last Monday’s announcement. “Some of these agents are suddenly in the uncomfortable situation of having no market for new business that comes in the door,” Straker explained. Coral is specialized in HO3 and doesn’t write condominium policies.

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.

An ominous sign

“It’s one more ominous sign that Florida’s property insurance market is approaching a state of crisis,” Jeff Grady, Florida Association of Insurance Agents president and CEO told Insurance Journal. “It also calls into question how the company was allowed to attain such a concentration of coastal exposure that many predicted would produce this type of adverse result if the wind blew harder than usual. ”

Grady said that, yes, this will mean higher rates.

“The reason Southern Family was the second largest writer of condo associations was that very few other companies would write these risks for a similar price,” he said. “Now, either Citizens will pick them up or they will find a higher price in a very limited admitted and surplus lines market.”

Unsettled market

Julie Pullman, an American Insurance Association spokesperson said that, generally, the Poe action is just another shock to an unsettled property insurance market.

“Florida policymakers need to respond by making positive reforms to the system so that sufficient insurance capital is attracted to the state and all of South Florida does not wind up in Citizens,” Pullman said. “This includes rate modernization, including the use of risk-based pricing, the ability to use CAT modeling to measure risk and getting rid of the statewide building code’s Panhandle carve out.

“All these things will help insurers reduce and better manage their cat exposure in Florida and will be attractive to the private market,” Pullman concluded.

Mary Frederick, communications director of the Professional Insurance Agents of Florida said PIA officials are meeting with Florida’s Department of Financial Services to discuss concerns and fallout.

Topics Florida Agencies Commercial Lines Homeowners