I guess companies were failing as the Insurance Comm was talking to the Senate, he just didn’t want to tell them. You have to love government, you don’t have to tell all fo the truth and you still get to keep your job. Why do the Senate and House allow this, when is enough enough. Kevin is suppose to protect consumers from insolvency, instead he is helping companies get there.
I think his goal is a Socialist Insurance Company, we can change the name of Citizens to SIC the people will buy in they can just promise low rates and they will fall all over it. It won’t matter if they are honest and lower rates never come…. it’s the government. We can make Kevin the KING of the company.
if Kevin is wanting a socialist company, why is he implementing policies that have shrunk Citizens, not expanded it? Why is it government gets blamed when private managers and investors fail like they did at AKIC? This failure has nothing to do with government policy; it has to do with poor management. Come on, fellow capitalists, take some responsibility.
If the OIR was watching this company for a year, why did it take so long to shut them down? Why were they still writing new policies in June? Why, why, why?
What I don’t understand is that between capitalization and premiums received, they had 61 million go through the company with only 3.7 million left. Have there been any hurricanes to take that much out of the company coffers? I don’t recall there being one. With normal expenses and losses shouldn’t there be 12 —15 million in account. Or were the rates so low and that even non-catastrophic losses put them out of business?
Poe Financial went bankrupt a few years back. They opened a new agency using the failed Poe name then contacted all the agents to let them know they are soliciting the former customers of your agency.
What commissioner would allow this crooked former policitian to even think about selling insurance again, let alone the public even trust them. They stole $800 million dollars from the public via assessments and are still in business.
A couple of posters here have trumpeted how great these start ups are. Well here is a company who couldnt make it when the wind didnt even blow. Good luck Florida!
The problem Al, is that government does not do its job in protecting the citizens from carriers who never have any intention on staying. Just start up your TPA and suck the money out of the carrier and when you cant operate anymore, you close shop and give the bills to the real carriers here and let them collect on their policies under a FIGA assessment.
Its not that hard to figure out what is going on here.
Let good stable national carriers come in and charge what they want and if you dont like it, go ahead and get your coverage from a company like American Keystone Insurance. For all you liberals out there that is capitalism at its best. It is called freedom to choose.
Here you go again lumping all start-ups together. Do you even know what American Keystone focused on writing? No, because you both sell circles around me in personal lines and don’t sell personal lines all at the same time.
Keystone tried to be a specialized writer and it bit them in the rear end. They didn’t go in to try to get rich at the expense of policyholders, they tried to run a reasonable business. It didn’t work. Businesses fail every day. Personally I didn’t write with them. They were very thinly capitalized to start, and then they only wanted high value, newer construction homes. Just didn’t fit a need at my agency.
How much did they pay Demotech for their rating. You do know that this thinly capitalized company has a Demotech “A” rating. Keystone had no intention of staying in business, they wanted to charge as little as possible and assume condo associations out of Citizens with the help of the DOI and when their ponzi was found out they are now giving the keys to FIGA. Who pays, we do! through FIGA assessments on our homeowners policies.
Mr Solvent? you should change your name to Mr. Insolvency.
Number of carriers I’ve represented in 11 years that have gone insolvent: 1. You know what carrier that was? I’ll give you a hint, it involved government bailout and sales of their profitable lines. What did AM Best rate this company?
How many Demotech carriers have I represented that have gone under? Wait…0! I didn’t write for Coral, or for the Poe companies (which had Best ratings until they went out of business).
So I’ll ask you the same question there Bill. How many insolvent carriers have you represented in 11 years?
Mr. Solvent: I do believe there’s more to it than that. You oversimplify. I’m not interested in bashing them but I’m certainly not going to jump on any “they tried to run a reasonable business” bandwagon. By your own admission they were thinly capitalized. In a short span of 2 years they pulled in over $50 million. They managed to get over 700 policies from Citizens that would have generated in the neighborhood of $15 million per yr in premiums. Despite that they couldn’t pull it off. The outstanding question still unanswered (as it often is) is where did all that money go?
The property insurance market in Fl is a mess, and it’s highly politicized. This is one of the results of the mess that Gov. Crist created. McCarty simply went along with him because he knows who’s buttering his bread.
You’re right. There is likely a lot more to the story…but a lot of people get into the insurance business thinking it is easy and there is a ton of money to be made. $50 mil in premium is great if the overhead is low and the reinsurance also low. We’d have to get into the books to look at non catastrophe losses, reinsurance expenses and executive salaries to know the whole story.
The bottom line I thought was clear. I didn’t feel comfortable representing the company so I didn’t. At the same time I don’t think we can just call them a Ponzi without knowing the facts.
In my 35 years in business, I wouldnt care what Demotech rates carriers due to the fact they only have one rating “A” which you keep saying is a as good as AM Best. Ask anyone in the industry who works in the marketing department of a large carrier and they will tell you Demotech is just selling their rating to anyone who will pay them. To get an AM Best rating you have to ask them to come and audit the carriers financials as well as their mix of business and geographical distribution of risk. Try doing that to your Florida Start up carriers and see how they rate. That is why they do not invite best to look at them. They would rather pay Demotech and advertise an A rating. Yes AIG went broke last year, due to their involvement in sophisticated financial ponzi schemes, Insuring the performance of mortgage backed securities. Their insurance arm includeding the life insurance company was and is performing great. A big money maker for AIG. Yes Mr Insolvency, I have had carriers go insolvent in 35 years Reliance Insurance Company A- rated, A 200 year old company who got into Junk bonds in the 1990’s. Both of these companies mentioned above crap bigger than your largest Florida start up you tought as being financially strong. One was declared by our president as too big to fail. I am just glad I dont have you advising me on my homeowners insurnace carriers ability to pay after a storm.
My carriers paid claims in 2004. They paid claims in 2005. Many are still here, still writing policies today.
Demotech has ratings above and below A. A is their 3rd best rating behind A Double Prime and A Prime. Demotech downgraded Keystone twice this year from A to S (substantial) and from S to M (moderate).
You said yourself that AM Best gave Reliance an A- and they went under. I’m not claiming Demotech to be AM Best or the other way around. Rating companies gave AAA ratings to junk bonds all through the real estate bust.
So I’ll take my track record and I’ll take my companies. Am I thrilled with everything I have to offer? No. Would I like some big carriers like Met Life and Travelers to start to take home insurance again? Yes. But that hasn’t happened yet. Until it does I have to pick the best possible carriers to represent and offer coverage to my customers.
I’m not sure I would “lump all start ups together” but I do have concerns over the condition of many. And those concerns often prevent me from allowing myself to write homes,with these carriers, that exceed the FIGA fund protection.
How can you not be concerned? American Keystone, according to DJ, followed a conservative path. Coral thought they knew what they were doing, etc. And the FL OIR is absolutely clueless with helping agents identify the next POE (Mr. Solvency are you that good or just lucky?)I hate to admit it but I am not qualified to have a thorough understanding of every company’s financial condition and it does no good if they don’t disclose truthful information anyway.
Tower Hills rating droped to D, all of the Florida based carriers, no matter who they are are in trouble of withstanding a hurricane. I am not in Florida but if I was, I would be demanding my Big I association to get involved with the legislature and department of Insurance of your state. Florida insurance market is crazy. What happened to free market capitalism and allowing carriers to charge what they need to stay in business and provide protection to the citizens of the State. It is in the best interest of the State to have healthy carriers writing business down there.
American Keystone is but another victim of the mess created by Charlie Crist and the legislature.
Combine the acuturally unsound low rates charged by Citizens (2/3 of what they should be), hold down rate increases by the rest of the carriers (a la State Farm)then allow unproven/unsubstantiated credits for wind mitigation features, and you have a formula* for failure. Can’t wait to see the increased assessments on my Commercial Property, CGL, Homeowners, Auto and Boat policies. Floridians will be paying for Charlie and Kevin’s “experiment” for years to come.
*Low rates = votes Just ask Charlie and Senator Jeff Atwater
I’d like to think a combination of both. I didn’t like Poe’s way of doing business and I never signed the takeout agreements.
As far as Coral goes…well…when they started out they only wanted to write in South Florida. RED FLAG. Then, they went on a crusade to insure very old and very high value homes. RED FLAG. Next, they wanted to expand to the rest of the state, checked only your pulse for an agency appointment, and raised their commissions. FINAL RED FLAG. These are the kind of things you have to look out for.
Anyone who takes the ratings from Demotech to be gospel does not belong in the insurance business in Florida. Demotech is merely a vehicle to allow various insurance companies to be in the Florida property insurance market, and have an “A” rating so that Banks and Condo and Home Owner Associations can accept the property insurance. Most banks and associations have by-laws that state the insurers must be “A” rated.
American Keystone wasn’t a victim of the politicians; they were a victim of poor management. Yes, the politicians have interfered with the rate setting in Florida and made it too low, but that doesn’t mean that the carrier needs to increase their writings and exposure. Poor management that couldn’t even profit in 2 years with no hurricanes.
Al, You can only call me a capitalist if I work in a feel economy, in this case I do not. I work in a government controlled economy with little concern if a profit can be made in insurance. It’s about using insurance as a policial pawn in a large game of chess. The problem is the lossers will be the citizens of Florida because they will pay the bill.
Maybe this business failed due to management issues however, government is not allowing capitalism to exist in the insurance market in Florida and that is a problem.
I don’t see how the government lowering Citizen’s rates and then having them compete in the open market for business helped shrink their size. I also feel it is socialism when they lowered the rates of Citizen’s and then if they fail again, I the consumer get to pick up 65% of the bill either in a tax on my homeowners premium or up to 6% on my auto premium for years and years to come. That is a strange form of capitalism.
Some of the comments posted have some truth to them and some are rediculous. All start ups are not ponzi schemes and Florida is actually a good avenue for investors and a management team to build a base for a good insurance company. Look at PURE for example. They started 2 years ago as a Florida only startup and have done extremely well and now they are able to expand to multiple states, 13 already. They even received an AM Best rating after approximately one year when they were in Florida only. ASI is another example of a Florida startup that was managed correctly and has done well. The problem is that a few bad seeds i.e. American Keystone are making a bad name for everyone. American Keystone never had a clue what they were doing because they simply undercut the market with extremely low premiums and they had very little capital. What happened to them was complete mismanagement because they were probably writing policies at premiums lower than the reinsurers ended up charging them upon renewal and therefore, they were broke. They were writing $30-$40 Million dollar condo complexes, with $5M in capital? Didn’t make any sense from the beginning.
The government is MOST Definetly to blame as well because they are mandating certain mitigation credits that cause rates to be artificially low and that is an absolute fact. Then to top it off, they put Citizens rates so low that no private company can run a conservative business model and compete with them because the company wouldn’t be able to write any business. How can you compete with Citizens 20-30 cent rates when the reinsurance will cost that much?
The simple solution would be for the state to offer insurance at MUCH higher rates so that everyone can get it on stuff the private market doesn’t want(This was what it was created in the first place for) and let the private market charge what they want. Increased competetion would make it so rates would not be through the roof although they would be much higher. It is not reasonable for people to pay 20 cent rates if they live in South Fla and that is what people want right now which is why we will be bankrupt when the next big hurricane does hit. Rates have to be higher and that is the bottom line.
Pure, I would not count as a Florida Start up. It is one of a very few Reciprical Insurance Exchanges. Like USAA the company owned by its policy holders and you are required to pay in 50% of your premium as surplus to the company. This is how they are able to keep premiums low. The company was started by a man named Ross Buckmuller who I have met many times. He was instrumental in AIG Private Client. He formed the Company in New York and yes the company does write in Florida, it never was a Florida Start up Company. They have recieved their A rating because they have a business model and spread of risk geographical now to obtain that rating. Unlike the florida only startups. ASI is another story, they are a Florida Only market and tettering on losing their ratings. Although their business model is that of not going out of business, I really wonder how financially solvent they are in the event of a large hurricane hitting Florida.
I guess companies were failing as the Insurance Comm was talking to the Senate, he just didn’t want to tell them. You have to love government, you don’t have to tell all fo the truth and you still get to keep your job. Why do the Senate and House allow this, when is enough enough. Kevin is suppose to protect consumers from insolvency, instead he is helping companies get there.
I think his goal is a Socialist Insurance Company, we can change the name of Citizens to SIC the people will buy in they can just promise low rates and they will fall all over it. It won’t matter if they are honest and lower rates never come…. it’s the government. We can make Kevin the KING of the company.
if Kevin is wanting a socialist company, why is he implementing policies that have shrunk Citizens, not expanded it? Why is it government gets blamed when private managers and investors fail like they did at AKIC? This failure has nothing to do with government policy; it has to do with poor management. Come on, fellow capitalists, take some responsibility.
If the OIR was watching this company for a year, why did it take so long to shut them down? Why were they still writing new policies in June? Why, why, why?
What I don’t understand is that between capitalization and premiums received, they had 61 million go through the company with only 3.7 million left. Have there been any hurricanes to take that much out of the company coffers? I don’t recall there being one. With normal expenses and losses shouldn’t there be 12 —15 million in account. Or were the rates so low and that even non-catastrophic losses put them out of business?
Poe Financial went bankrupt a few years back. They opened a new agency using the failed Poe name then contacted all the agents to let them know they are soliciting the former customers of your agency.
What commissioner would allow this crooked former policitian to even think about selling insurance again, let alone the public even trust them. They stole $800 million dollars from the public via assessments and are still in business.
Put them in jail with Peoples Trust
and i thought the massachusetts insurance market was effed up!
A couple of posters here have trumpeted how great these start ups are. Well here is a company who couldnt make it when the wind didnt even blow. Good luck Florida!
All of these start ups are a ponzi.
The problem Al, is that government does not do its job in protecting the citizens from carriers who never have any intention on staying. Just start up your TPA and suck the money out of the carrier and when you cant operate anymore, you close shop and give the bills to the real carriers here and let them collect on their policies under a FIGA assessment.
Its not that hard to figure out what is going on here.
Let good stable national carriers come in and charge what they want and if you dont like it, go ahead and get your coverage from a company like American Keystone Insurance. For all you liberals out there that is capitalism at its best. It is called freedom to choose.
Here you go again lumping all start-ups together. Do you even know what American Keystone focused on writing? No, because you both sell circles around me in personal lines and don’t sell personal lines all at the same time.
Keystone tried to be a specialized writer and it bit them in the rear end. They didn’t go in to try to get rich at the expense of policyholders, they tried to run a reasonable business. It didn’t work. Businesses fail every day. Personally I didn’t write with them. They were very thinly capitalized to start, and then they only wanted high value, newer construction homes. Just didn’t fit a need at my agency.
How much did they pay Demotech for their rating. You do know that this thinly capitalized company has a Demotech “A” rating. Keystone had no intention of staying in business, they wanted to charge as little as possible and assume condo associations out of Citizens with the help of the DOI and when their ponzi was found out they are now giving the keys to FIGA. Who pays, we do! through FIGA assessments on our homeowners policies.
Mr Solvent? you should change your name to Mr. Insolvency.
You children play nice!
Number of carriers I’ve represented in 11 years that have gone insolvent: 1. You know what carrier that was? I’ll give you a hint, it involved government bailout and sales of their profitable lines. What did AM Best rate this company?
How many Demotech carriers have I represented that have gone under? Wait…0! I didn’t write for Coral, or for the Poe companies (which had Best ratings until they went out of business).
So I’ll ask you the same question there Bill. How many insolvent carriers have you represented in 11 years?
Mr. Solvent: I do believe there’s more to it than that. You oversimplify. I’m not interested in bashing them but I’m certainly not going to jump on any “they tried to run a reasonable business” bandwagon. By your own admission they were thinly capitalized. In a short span of 2 years they pulled in over $50 million. They managed to get over 700 policies from Citizens that would have generated in the neighborhood of $15 million per yr in premiums. Despite that they couldn’t pull it off. The outstanding question still unanswered (as it often is) is where did all that money go?
The property insurance market in Fl is a mess, and it’s highly politicized. This is one of the results of the mess that Gov. Crist created. McCarty simply went along with him because he knows who’s buttering his bread.
You’re right. There is likely a lot more to the story…but a lot of people get into the insurance business thinking it is easy and there is a ton of money to be made. $50 mil in premium is great if the overhead is low and the reinsurance also low. We’d have to get into the books to look at non catastrophe losses, reinsurance expenses and executive salaries to know the whole story.
The bottom line I thought was clear. I didn’t feel comfortable representing the company so I didn’t. At the same time I don’t think we can just call them a Ponzi without knowing the facts.
In my 35 years in business, I wouldnt care what Demotech rates carriers due to the fact they only have one rating “A” which you keep saying is a as good as AM Best. Ask anyone in the industry who works in the marketing department of a large carrier and they will tell you Demotech is just selling their rating to anyone who will pay them. To get an AM Best rating you have to ask them to come and audit the carriers financials as well as their mix of business and geographical distribution of risk. Try doing that to your Florida Start up carriers and see how they rate. That is why they do not invite best to look at them. They would rather pay Demotech and advertise an A rating. Yes AIG went broke last year, due to their involvement in sophisticated financial ponzi schemes, Insuring the performance of mortgage backed securities. Their insurance arm includeding the life insurance company was and is performing great. A big money maker for AIG. Yes Mr Insolvency, I have had carriers go insolvent in 35 years Reliance Insurance Company A- rated, A 200 year old company who got into Junk bonds in the 1990’s. Both of these companies mentioned above crap bigger than your largest Florida start up you tought as being financially strong. One was declared by our president as too big to fail. I am just glad I dont have you advising me on my homeowners insurnace carriers ability to pay after a storm.
You heard it here, first.
Thank God we didn’t get a hurricane this year.
My carriers paid claims in 2004. They paid claims in 2005. Many are still here, still writing policies today.
Demotech has ratings above and below A. A is their 3rd best rating behind A Double Prime and A Prime. Demotech downgraded Keystone twice this year from A to S (substantial) and from S to M (moderate).
You said yourself that AM Best gave Reliance an A- and they went under. I’m not claiming Demotech to be AM Best or the other way around. Rating companies gave AAA ratings to junk bonds all through the real estate bust.
So I’ll take my track record and I’ll take my companies. Am I thrilled with everything I have to offer? No. Would I like some big carriers like Met Life and Travelers to start to take home insurance again? Yes. But that hasn’t happened yet. Until it does I have to pick the best possible carriers to represent and offer coverage to my customers.
I’m not sure I would “lump all start ups together” but I do have concerns over the condition of many. And those concerns often prevent me from allowing myself to write homes,with these carriers, that exceed the FIGA fund protection.
How can you not be concerned? American Keystone, according to DJ, followed a conservative path. Coral thought they knew what they were doing, etc. And the FL OIR is absolutely clueless with helping agents identify the next POE (Mr. Solvency are you that good or just lucky?)I hate to admit it but I am not qualified to have a thorough understanding of every company’s financial condition and it does no good if they don’t disclose truthful information anyway.
Tower Hills rating droped to D, all of the Florida based carriers, no matter who they are are in trouble of withstanding a hurricane. I am not in Florida but if I was, I would be demanding my Big I association to get involved with the legislature and department of Insurance of your state. Florida insurance market is crazy. What happened to free market capitalism and allowing carriers to charge what they need to stay in business and provide protection to the citizens of the State. It is in the best interest of the State to have healthy carriers writing business down there.
American Keystone is but another victim of the mess created by Charlie Crist and the legislature.
Combine the acuturally unsound low rates charged by Citizens (2/3 of what they should be), hold down rate increases by the rest of the carriers (a la State Farm)then allow unproven/unsubstantiated credits for wind mitigation features, and you have a formula* for failure. Can’t wait to see the increased assessments on my Commercial Property, CGL, Homeowners, Auto and Boat policies. Floridians will be paying for Charlie and Kevin’s “experiment” for years to come.
*Low rates = votes Just ask Charlie and Senator Jeff Atwater
…are you that good or just lucky?
I’d like to think a combination of both. I didn’t like Poe’s way of doing business and I never signed the takeout agreements.
As far as Coral goes…well…when they started out they only wanted to write in South Florida. RED FLAG. Then, they went on a crusade to insure very old and very high value homes. RED FLAG. Next, they wanted to expand to the rest of the state, checked only your pulse for an agency appointment, and raised their commissions. FINAL RED FLAG. These are the kind of things you have to look out for.
Anyone who takes the ratings from Demotech to be gospel does not belong in the insurance business in Florida. Demotech is merely a vehicle to allow various insurance companies to be in the Florida property insurance market, and have an “A” rating so that Banks and Condo and Home Owner Associations can accept the property insurance. Most banks and associations have by-laws that state the insurers must be “A” rated.
American Keystone wasn’t a victim of the politicians; they were a victim of poor management. Yes, the politicians have interfered with the rate setting in Florida and made it too low, but that doesn’t mean that the carrier needs to increase their writings and exposure. Poor management that couldn’t even profit in 2 years with no hurricanes.
Al, You can only call me a capitalist if I work in a feel economy, in this case I do not. I work in a government controlled economy with little concern if a profit can be made in insurance. It’s about using insurance as a policial pawn in a large game of chess. The problem is the lossers will be the citizens of Florida because they will pay the bill.
Maybe this business failed due to management issues however, government is not allowing capitalism to exist in the insurance market in Florida and that is a problem.
I don’t see how the government lowering Citizen’s rates and then having them compete in the open market for business helped shrink their size. I also feel it is socialism when they lowered the rates of Citizen’s and then if they fail again, I the consumer get to pick up 65% of the bill either in a tax on my homeowners premium or up to 6% on my auto premium for years and years to come. That is a strange form of capitalism.
Some of the comments posted have some truth to them and some are rediculous. All start ups are not ponzi schemes and Florida is actually a good avenue for investors and a management team to build a base for a good insurance company. Look at PURE for example. They started 2 years ago as a Florida only startup and have done extremely well and now they are able to expand to multiple states, 13 already. They even received an AM Best rating after approximately one year when they were in Florida only. ASI is another example of a Florida startup that was managed correctly and has done well. The problem is that a few bad seeds i.e. American Keystone are making a bad name for everyone. American Keystone never had a clue what they were doing because they simply undercut the market with extremely low premiums and they had very little capital. What happened to them was complete mismanagement because they were probably writing policies at premiums lower than the reinsurers ended up charging them upon renewal and therefore, they were broke. They were writing $30-$40 Million dollar condo complexes, with $5M in capital? Didn’t make any sense from the beginning.
The government is MOST Definetly to blame as well because they are mandating certain mitigation credits that cause rates to be artificially low and that is an absolute fact. Then to top it off, they put Citizens rates so low that no private company can run a conservative business model and compete with them because the company wouldn’t be able to write any business. How can you compete with Citizens 20-30 cent rates when the reinsurance will cost that much?
The simple solution would be for the state to offer insurance at MUCH higher rates so that everyone can get it on stuff the private market doesn’t want(This was what it was created in the first place for) and let the private market charge what they want. Increased competetion would make it so rates would not be through the roof although they would be much higher. It is not reasonable for people to pay 20 cent rates if they live in South Fla and that is what people want right now which is why we will be bankrupt when the next big hurricane does hit. Rates have to be higher and that is the bottom line.
Pure, I would not count as a Florida Start up. It is one of a very few Reciprical Insurance Exchanges. Like USAA the company owned by its policy holders and you are required to pay in 50% of your premium as surplus to the company. This is how they are able to keep premiums low. The company was started by a man named Ross Buckmuller who I have met many times. He was instrumental in AIG Private Client. He formed the Company in New York and yes the company does write in Florida, it never was a Florida Start up Company. They have recieved their A rating because they have a business model and spread of risk geographical now to obtain that rating. Unlike the florida only startups. ASI is another story, they are a Florida Only market and tettering on losing their ratings. Although their business model is that of not going out of business, I really wonder how financially solvent they are in the event of a large hurricane hitting Florida.
Almost all Florida Start ups are a ponzi!