People’s Trust, Southern Fidelity Stop Writing New Business in Florida

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Two more property insurers, including two of Florida’s larger carriers, did not wait around to see what help the just-concluded special session of the Legislature may provide, and have stopped new business in the state.

People’s Trust, once listed as the ninth-largest property-casualty carrier in the state and whose chief operating officer is former Florida Insurance Commissioner Tom Gallagher, on May 19 made a filing with the Florida Office of Insurance Regulation. It said the company would suspend writing new homeowner and dwelling-fire policies that day.

Southern Fidelity Insurance Co., headquartered in Tallahassee, told agents Thursday that it had suspended new and renewal business for all lines until it can complete its reinsurance coverage for the 2022 hurricane season. Existing quotes cannot be bound, the memo said.

“We deeply apologize to our agency partners for the impact this will take on your business and appreciate your commitment to us,” reads the Southern Fidelity announcement. The company also writes in South Carolina, Louisiana and Mississippi.

Company offices will be closed starting today, Friday, at 2 p.m., the company said.

The People’s Trust filings, which were quickly approved by OIR, tweak wording in the company’s manuals for homeowners multi-peril and for dwelling fire coverage. Ineligible risks now include “new business located in all Florida counties.”

The companies did not indicate how long the suspensions would be in effect. Gallagher and other People’s Trust officials could not be reached for comment Friday morning.

It’s unclear if the carriers will be able to tap into a special reinsurance program established this week by the Florida Legislature at its special insurance session, or if the program would provide enough savings to help complete their reinsurance.

Gallagher

The filings did not indicate how many People’s Trust policies will be affected. People’s Trust does not report the quarterly information to OIR. Southern Fidelity does, and reported 98,641 policies in force at the end of 2021, and $184 million in total premium written. Southern Fidelity was provided significant financial support in late 2020 when Hudson Structured Capital Management took a majority ownership stake.

The carriers are now the seventh and eighth insurers to announce they have stopped writing in Florida’s distressed market in the last seven months. Others include United P&C Insurance, Avatar Insurance (now insolvent), Florida Farm Bureau and TypTap. Progressive Insurance also said late last year it will not renew homes with roofs over 16 years of age. Other carriers have made similar filings.

The suspension cames as a surprise to some, not to others in the Florida insurance market. Some have warned that more carriers will soon become insolvent, despite the action from lawmakers at the special session this week.

People’s Trust had a business model was seen by many as innovative when it was unveiled about five years ago. The company was one of the first to require the use of its own contracting companies to make repairs after claims were filed, and the insurer had prevailed in several court decisions in the last two years that upheld the requirement.

Some policyholders and their attorneys have complained that the restoration companies did not complete jobs or provided poor-quality work.

Topics
Florida

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