A Florida domestic property insurance company has been told to stop writing business– the second time in a week state regulators have had to act against an insurer.
Hollywood-based Coral Insurance, which began doing business in March 2004 and has 11,776 customers, has been found to be in impaired financial condition by the Florida Office of Insurance Regulation (FLOIR).
According to Edward Domansky, FLOIR spokesman, the state on March 27 suspended the company’s license to write business for six months after determining that the insurer had about $2 million less than the $4 million in surplus it should have.
Domansky said state auditors largely blame claims from Hurricane Wilma in late 2008 and early 2009, some of them re-opened by public adjusters, for the company’s financial weakness. The insurer had exhausted its reinsurance and been forced to pay more claims directly.
In early March, the company stopped writing new business. This week, the company told its agents to place homeowners renewals with other carriers.
In late December, the carrier had received a $5 million cash infusion to help deal with the burgeoning Wilma claims problem.
Domansky said the six month license suspension gives the company some time to see if it can get its financial house in order before the state has to step in. He said the state has had its eye on Coral for months and been monitoring the situation closely.
Should Coral be unable to meet its claims obligations, the state guaranty fund would be triggered to help cover some claims for the company’s policyholders. The bulk of Coral’s customers are in Palm Beach, Miami-Dade and Broward counties.
Attempts to reach Coral were not returned.
The Coral intervention by FLOIR comes barely a week after state insurance regulators halted another domestic property insurer, People’s Trust, from writing new business until further notice.
People’s Trust was found in violation of numerous state laws and regulations, including operating with inadequate reinsurance, selling with unlicensed agents, issuing misleading marketing materials and using unfiled rates.
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