One of Florida’s new startup property insurance companies has been told to stop selling policies — at least for a while.
Insurance Commissioner Kevin McCarty said Boca Raton-based People’s Trust has not followed state regulations nor its business plan and will not be allowed to write new policies until it complies. However, the insurer was ordered to continue servicing existing customers.
McCarty said there was no reason for policyholders to worry because the new company had already exceeded its growth plan through 2009 and needs to slow down and refocus. People’s Trust founder and CEO Mike Gold said 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,” Gold said.
McCarty said the company — which received a license to do business in Florida just a year ago — also wrote more policies than permitted, creating a higher exposure on paying claims if a destructive storm hit the state.
McCarty said People’s Trust, among other things, failed to obtain inspection reports to confirm replacement cost values, or insurability. There were also problems with various practices related to claims submission, investigation and payment.
“The plan was to see them grow, but they’ve just grown too quickly,” said Ed Domansky, spokesman for the Office of Insurance Regulation. “That’s one of the reasons why the office stepped in and had them stop writing new business.”
People’s Trust had written more than 20,500 policies by the end of 2008, garnering premiums totaling more than $22.6 million. That’s about $5 million more than it had agreed to write in its first year.
“The plan they submitted was for slow growth and careful underwriting,” Domansky said. “They were not doing those things.”
People’s Trust company received its license in March 2008 with an initial capitalization of $10 million.