Nine questions and answers about the receivership and status of Poe Financial Corp.’s subsidiaries Southern Family and Atlantic Preferred have been provided to Professional Insurance Agents of Florida members who “flooded” the association’s office with questions after reports that the companies were in trouble.
“This issue has been reported to varying degrees in newspapers throughout the state with sometimes confusing conclusions,” Mark O’Connell, PIA of Florida CEO said. “Rather than assume what is or might be happening we wanted to ask the people who will be responsible for handling this matter.”
PIA of Florida contacted Tom Brinkley, Department of Financial Services’ receivership coordinator, and Ed Pasterick of the National Flood Insurance Plan and asked them to answer as many as possible.
PIA of Florida provided its members with “the best answers that are available at this time, but due to the complexity of the issues, the timing of events to occur, and the various parties involved, the Florida Department of Financial Services just doesn’t have all the answers developed quite yet.”
1. If all three of the Poe companies go into liquidation, will there be any policy administrative functions still handled by Poe or by Poe staff under the supervision of Citizens?
At this time, we are not sure. The Receiver’s plan is being developed and must be approved by the court.
2. Is there any sense as to when the courts would or could sign off on the plan so that we would know exactly what was going to happen?
At this point, the only dates we know are those outlined in the anticipated timeline. Southern Family did go into Rehabilitation on April 26, and Atlantic Preferred did go into Rehabilitation on May 1.
3. How does the plan deal with “lessening the burden” on agents with regard to the notification of policyholders?
At this time, we are not sure. The Receiver’s plan is being developed and must be approved by the court.
4. With regards to new claims during the transition, what happens if there is a claim that exceeds the FIGA (Florida Insurance Guaranty Fund) limit? (For example, a house burns down now and the claim exceeds FIGA’s limits.)
If a loss occurs during the period in which FIGA is responsible for coverage (or if a pre-occurring loss remains unpaid at the time of liquidation), then it will be subject to FIGA’s statutory cap and applicable deductible.
5. What is going to happen with policies in which Poe has already sent out non-renewals notices? Is that on hold, or will those policies have to be processed directly through Citizens?
Policyholders should pay premiums as normal in order to continue their insurance coverage. Policyholders who have received renewal notices for renewal periods beginning prior to July 1, 2006, should also pay premiums to continue their coverage after the renewal date, unless they obtain coverage elsewhere.
Under the receivership plan, if approved by the court, the policies that are still in force with Southern Family on June 30 will be transitioned to Citizens Property Insurance Corporation automatically by court order until the normal expiration of the policy (unless it is cancelled earlier by the policyholder or for non-payment of premium).
Citizens is aware that policyholders whose policies have normal expiration dates in July will have limited time in which to receive any offers of renewed coverage from Citizens and is currently working on a method for notifying these policyholders of their future coverage options.
6. Poe wrote many condo-unit owner policies that are in the wind pool, but they included wind coverage on the HO6 policies. Citizens doesn’t do this so what will happen to these policies?
Our understanding is that Citizens will provide the coverage as it existed under the Poe policy until the expiration of that policy term.
7. What happens if there is a coverage on the Poe policy that Citizens doesn’t cover? (For example, some Poe policies have limited animal liability coverage, higher limits for additional living expenses, and there is even scheduled jewelry coverage on some policies.)
Our understanding is that Citizens will provide the coverage as it existed under the Poe policy until the expiration of that policy term.
8. Agents are going to want to know what is happening with their commissions. If the policies are not cancelled, then will the commissions be paid and, if so, at what rate? Poe has several different commission plans. Will Poe’s commission agreement stand, or will agents revert to the Citizens schedule?
At this time, we do not know the answer to these questions.
9. What happens to the flood policies that Southern Family wrote?
Ed Pasterick of the National Flood Insurance Program said that they are in the process of discussing ideas with state officials. The policies will be moved to another company or brought into the NFIP directly. They’ll find out next week.
Source: Professional Insurance Agents of Florida
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