- The Washington Times - Wednesday, March 8, 2006

WEST PALM BEACH, Fla. (AP) — Thousands of Florida home and condominium owners will lose their insurance policies in June after one of the state’s largest property insurers said it will stop issuing new policies and drop some customers because of hurricane losses.

The move by Poe Financial Group likely means higher insurance rates for all in the state.

The Tampa-based company, the second-largest home insurer in South Florida, took a $2 billion hit from 125,000 claims in the very active 2004 and 2005 hurricane seasons, prompting it to cut its policies to raise more capital, Senior Vice President David Gough said yesterday.

Poe subsidiary Southern Family Insurance Co. will stop issuing new policies or renewing them for existing customers. Atlantic Preferred Insurance Co. and Florida Preferred Insurance Co., also Poe subsidiaries, will stop issuing new home or condo policies but will continue to renew existing customers.

The order takes effect June 9. All three companies will continue to pay existing claims.

“Right now, there’s a lot of uncertainty,” Mr. Gough said. “We’re talking about millions of dollars in order to get back on track.”

Mr. Gough said the company’s three subsidiaries currently carry 316,000 policies. Southern Family will cut 43,000 customers.

He said Poe would be aggressively seeking money from investors.

“We want to continue being a major player in the market,” Mr. Gough said, adding that there would be no layoffs.

The move will likely mean higher rates for everyone as more Florida homeowners find it difficult to get covered and are pushed into policies with Citizens Property Insurance, the state-created insurer of last resort that already is South Florida’s largest insurer.

By law, Citizens must charge the highest rates in the state so it doesn’t compete with traditional companies.

Officials with the state Office of Insurance Regulation declined to comment yesterday.

Residential property insurers have been hit by losses of more than $24 billion from eight hurricanes that affected Florida in the past two years.

Citizens has assessed all Florida homeowners, regardless of their insurance companies, for $515.5 million in 2004 losses. Another Citizens assessment is expected to cover a $1.4 billion deficit from last year’s storms.

When Citizens comes up short, all other companies’ customers make up the difference.

“This is not a rosy scenario at all,” said Brian Samberg, president of Southeast Insurance Agency in Boca Raton. “It’s going to be very difficult for the consumer. Poe had extremely competitive prices. By withdrawing from the market, consumers are definitely going to see their rates moving upward. There are just so few companies offering policies at the moment.”

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