A judge agreed with my view posted in, Did Florida Mistakenly Place an Insurer Into Insolvency, Try to Disqualify the Law Firm That Pointed Out the Mistake and Harm 91,000 Policyholders By Quick and Unnecessary Non-Renewals?

The Florida Department of Financial Services and the Office of Insurance simply made a mess of Florida Specialty Insurance Company’s financial problems and cancellation of policies.

The court obviously was displeased with attorneys for the Department of Financial Services. The Department made false fillings which then lead to the court issuing the liquidation and policy cancellation. He said this never should have happened:

[Y]ou asked me to sign a consent order that said they consent they were insolvent. I don’t care which area of the law is, when a judge gets a consent order, that judge believes it’s an agreed order. Under any area of the law. I would never have signed it. It’s that simple.

….

the bottom is they don’t want to be defamed all over the world by saying they committed some criminal act.

I guess everybody makes mistakes. Putting an insurance company into a liquidation with wrong filings is a pretty big mistake.

The next questions remaining are the impact of actions that were undertaken during the liquidation that cannot be corrected. Some people had their policies cancelled and dumped into Citizens Property Insurance, which is not good public policy. Hopefully, somebody at the DFS did not stop pursuing the premium monies allegedly owed in the dispute with AIG/Lexington as well as the reinsurance claims monies owed under that policy.

Eventually, Florida Specialty Insurance Company may find itself in liquidation and those policies cancelled. However, it can certainly be a lot more orderly and in a manner where other private carriers rather than Citizens Property Insurance picks up many of those insurance customers.

I am certain that there are many dedicated and well-meaning employees at Florida’s Department of Financial Services and Office of Insurance Regulation. Sometimes, however, I wonder if we should have one Florida department of insurance rather than two entities running Florida’s insurance scheme.

We should also have an elected, rather than appointed, insurance commissioner in charge. This leadership change should be decided with a proposed constitutional amendment. Power to the people!

Thought For The Day

To err is human; to forgive, divine
—Alexander Pope

  • shirley heflin

    Dear Chip:

    Wow, I read that 30 page hearing transcript and I felt like I was reading a criminal suspense novel! I’m stunned by the sneakiness of the Office of Insurance Regulation’s (Department of Insurance’s) behavior in obtaining the subject consent order. By calling the petition a “consent petition,” the Department made it appear to the Court that it was an “agreed upon” action. Nothing could be further from the truth!

    Indeed, I noticed that the Department of Insurance did not proffer a “Joint Stipulation” as a means to obtain a consent order. The reason they didn’t is because counsel for ALL parties would have to sign it and that would not have happened. Therefore, they took the underhanded tactic they took to obtain a consent order. It didn’t work with Judge Flury, however, as he made it abundantly clear everyone is afforded due process in his court.

    Respectfully,
    SHIRLEY HEFLIN
    Tampa, FL

  • One must only ask the single question that leads to an honest answer. Who stands to benefit the most? Answer that question, and it will automatically tell you the why. Where did the majority of those policies/premiums land?

    • Chip Merlin

      Cal,

      Your question is very good. But I would suggest that
      where the premiums for where the policies go should not be the assumed answer.
      For example, did AIG/Lexington want to get away from their reinsurance
      obligation by having the government declare a liquidation? Following the
      question about the money is a very good question to ask.

      • Agreed. I would simply add that the $400 million, I think was the number owed, versus a lifetime of premiums over 90,000 plus policies may have been, as our experience would suggest, a benefit to both, or a “sharing of the risk…”

  • Opw4ghx

    Good job, DFS/OIR. Through either gross negligence or outright criminality, you uprooted 91,000 households just before the holidays leaving people not only scrambling to find affordable insurance but also in many cases paying out of pocket for last minute home inspections and repairs in order to meet ever-tightening insurance standards. Nothing like pulling the wool over a judge’s eyes. Could have been an orderly transition assuming there really was an insolvency issue, but no….

    Is this how agencies justify their existence in this modern, dysfunctional world?

    Thank goodness for sovereign immunity, eh? Must be nice. Well done!

    T. Affected

    P.S. You should have been looking for any reason possible not to do this in this manner.