Florida insurer Gulfstream agrees to liquidate
Sarasota-based insurer Gulfstream Property and Casualty Insurance Co. agreed to liquidate after becoming insolvent.
In an order accepted by Gulfstream on Thursday evening, the Florida Office of Insurance Regulation recommended that the state take back Gulfstream. Once approved, Gulfstream customers have 30 days to find new coverage.
“Especially during hurricane season, the priority (of the Office of Insurance Regulation) is to ensure consumers have continuous access to coverage,” said Alexis Bakofsky, spokesperson for the regulator. The regulator “has worked closely with other private operators to provide consumers with simplified options for replacement coverage in the private market.”
“A substantial number” of Gulfstream customers will be offered coverage through Florida Peninsula Insurance Co., its subsidiary Edison Insurance Co., Homeowners Choice Property Casualty Insurance Co. and its subsidiary TypTap Insurance Co., according to Bakofsky.
The liquidation decision comes less than a month after the regulator placed Gulfstream under its supervision for a period of 90 days to “liquidate” the company. This process is generally confidential, but the regulator has chosen to make it public.
Gulfstream has fallen below the minimum required by the state for the funds it must hold to pay claims, known as “surplus”. Its surplus fell 20% to $ 20 million from 2019 to 2020. It generated $ 17.1 million in investment last year to hit the state minimum, but again fell below the minimum required on June 21.
The company suffered a technical loss of $ 35 million in 2020.
Gulfstream’s woes are in line with greater instability in the Florida property insurance market. Last year, Florida insurers reported a combined $ 1.57 billion in underwriting losses, spending more on claims and expenses than they reported in premiums. Citizens Property Insurance Co., the state-run insurer of last resort, hit its highest level in years as it writes policies that other insurers drop.
Gulfstream was one of three companies allowed earlier this year to offload 53,200 policies, including 20,311 from insurer Sarasota. He had one of the fastest time frames to straighten the finances of the businesses affected, with his affected clients having 45 days to find another insurer.
Shortly thereafter, its financial stability rating was withdrawn by Demotech Inc., a private company that rates many insurers in Florida. Gulfstream previously had an “A” rating for “exceptional”.
The Florida Department of Financial Services must give its approval before the company can formally go through the receivership process and liquidate.
Gulfstream customers, Bakofsky said, should check with their insurance agent for replacement coverage. If they are unable to do so, they will likely find coverage with Citizens. Affected customers can call the Florida Department of Financial Services helpline at 877-693-5236 or email [email protected]