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Surcharge Raises Insurance 2%

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By RUSSELL RAY, The Tampa Tribune

Published: October 31, 2007

Previous Coverage: Reflections On An Insurance Casualty

TAMPA - State insurance regulators said Tuesday that they approved a 2 percent surcharge on all homeowners and commercial property policies in Florida to cover higher than anticipated losses from the 2006 collapse of Tampa-based Poe Financial Group.

The one-time surcharge, which will add $20 to every $1,000 in premiums, will be applied to policies next year as they renew. It will raise $340 million, most of which will be used to pay insurance claims of Poe Financial.

The Florida Insurance Guaranty Association, a nonprofit agency charged with covering the claims of failed insurers, said it needs an additional $300 million to cover the claims of Poe's three insurance companies: Atlantic Preferred, Southern Family and Florida Preferred.

The three companies were wiped out financially after eight hurricanes hit Florida in 2004 and 2005. It was the largest insurance failure in Florida's history.

'We're still trying to get the funds to cover the Poe Financial claims,' said Margaret Dodson, a spokeswoman for the Florida Insurance Guaranty Association.

The cost of Poe's collapse grew to $750 million from $500 million as new claims were filed and old claims were reopened, Dodson said. New claims are still coming in from former Poe customers at the rate of 50 to 100 a week, FIGA said.

The company had heavy exposure in South Florida, which was hit hard by Hurricane Wilma in October 2005.

Florida Insurance Commissioner Kevin McCarty approved FIGA's request to levy the assessment as policies renew.

Dodson attributed the additional claims to insurance adjusters aggressively soliciting homeowners in South Florida. Insurance adjusters represent the insured in claim settlements and have no relationship with the insurance underwriter.

'These public adjusters started advertising and having people reopen their claims,' she said. 'We've had a lot more reopened than we thought.'

To date, FIGA has settled 43,000 claims from former Poe customers.

The new assessment is expected to also cover the claims of another insurer known as Vanguard.

It's the third time a 2 percent assessment has been levied against Florida policyholders to cover the claims of Poe Financial. Last year, FIGA imposed two assessments at 2 percent each.

This assessment, though, will be applied for the first time to homeowners policies covered by Citizens Property Insurance Corp., the state-backed insurer of last resort. In legislation passed in January, the Legislature removed Citizens' exemption from such assessments.

The assessment will be applied to policies, including medical malpractice and aircraft, in Florida as they renew next year.

Even as state officials continue to work through the claims left behind by the failed company, the founder of Poe Financial Group, William F. Poe Sr., is selling insurance again through a separate company, Poe & Associates LLC in Tampa.

News of the additional assessment is sure to hurt the company's efforts to sign up new customers, Poe said in a telephone interview.

Poe, a former mayor of Tampa, said Poe & Associates is a separate entity that specializes in selling insurance but doesn't underwrite risk.

'It has nothing to do with the companies that went down,' Poe said.

Reporter Russell Ray can be reached at (813) 259-7870 or rray@tampatrib.com.

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