Legal Storm Brewing for Florida Insurers

Imagine losing your home to a hurricane and discovering that your insurer was bankrupted by claims. Then come charges that insurance company executives had siphoned off $144 million meant to pay claims — including, perhaps, yours.

Hundreds of Florida residents are in that situation, and closely tracking a lawsuit that the state Department of Financial Services has filed against several family-owned insurance companies and 20 of their executives.

In its suit, the Florida agency said the companies — Poe Insurance Holdings, Poe Family Investment Co., and Poe Investments Inc. — said they were bankrupted by claims from the spate of hurricanes in 2004 and 2005, while the companies actually kept millions that should have been paid to clients for damage and loss of homes.

The state filed the suit last Friday in circuit court in Tallahassee, seeking more than $100 million in damages. The Poe companies had been one of the state's biggest property insurers, according to the Sun-Sentinel in Fort Lauderdale.

Florida officials say that the executives, who include members of the Poe family, knew that their companies were foundering under the claim volume generated by the 2004 hurricanes. Even though their reserves were inadequate, they misled regulators, the suit said, and kept collecting premiums.

When the Poe companies ran into financial trouble, the state's residents and businesses made up the shortfall by paying additional fees on their insurance policies, according to state officials.

"We will aggressively pursue any opportunity to recoup additional funds to reduce the assessments levied against Florida's insurance consumers," Alex Sink, the state's chief financial officer, said in a statement.

by Elizabeth Olson