Florida insurance regulators have notified a Jacksonville-based insurer that it has until the end of the month to comply with solvency requirements to avoid suspension or losing its license.
The warning to Southern Oak Insurance Co. is just the first in what regulators said will be a series of similar messages to companies on the brink of insolvency.
Officials expect some will fail. “You’ll lose some companies,” said Robin Westcott, who monitors insurers. “That’s the natural process of the market. There will be at least three or four.”
Regulators are concerned that Southern Oak funneled too much profit to its managing general agent while claiming underwriting losses, held too much risk in south Florida and retained insufficient catastrophe reserves.
Florida’s chief financial officer wants to know more and has asked the Office of Insurance Regulation for a status report on insurers by March 21. “What gives in an environment with four years of no storms?” CFO Alex Sink asked after a meeting of Cabinet. “Our insurance companies ought to be making good profits.”
Three property insurers went into receivership last year, two others are under administrative supervision and several more are expected to follow soon.
Also, the Sarasota HeraldTribune reported that half of the state’s insurers are making money by diverting premiums into side ventures. The report also said that insurance company overhead costs are 50 percent higher in Florida than the national average.
Topics Florida Carriers Data Driven Property
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