Florida Approves Surcharge for Property Insurance Policies

June 26, 2006

Florida has approved a 2 percent surcharge on all property insurance policies to help cover outstanding claims for one of Florida’s largest property insurers, whose insolvent subsidiaries are being liquidated under state control because of hurricane losses.

Poe Financial Group took a $2 billion hit from 125,000 claims stemming from the very active 2004 and 2005 Atlantic hurricane seasons.

In May, the Tampa-based insurer handed over the last of its three insurance subsidiaries to the state after not being able to pay outstanding claims.

The surcharge is expected to raise $225 million to help cover outstanding claims for Poe Financial’s insurance operations. It was approved by the state’s Insurance Guaranty Association.

Insurers must get permission from the state to pass on the extra cost to policy holders, said Michelle Lovern, deputy director of the Insurance Guaranty Association.

Poe Financial vice president David Gough said he didn’t know how the state arrived at the 2 percent figure or whether it considered opportunities to recover costs through reinsurance.

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