Florida-based property insurer placed under state supervision

Gulfstream Property & Casualty Insurance Co., a Sarasota-based company that was ordered in May to terminate 20,311 policies, has been placed under state supervision to protect policyholders as it dissolves.

“The purpose of the administrative supervision is to facilitate an orderly wind-down of the company. At this time, Gulfstream is not writing new policies or renewing policies,” said Alexis Bakofsky, spokeswoman for the Florida Office of Insurance Regulation. “OIR’s priority remains the protection of consumers and will make every effort to ensure consumers have access to coverage.”

Gulfstream notified the state on June 23 “that it determined that it was [financially] impaired as of June 21, 2021 and unable to comply with the minimum surplus” required under state law, according to the June 25 order of supervision.

Under the order, the company must obtain state approval to withdraw any money from its bank accounts, lend or invest any funds, sell any assets, transfer any property, incur any debt, or merge or consolidate with any other company.

When companies dissolve under state oversight, they usually look for other healthier companies that are financially strong enough to absorb most or all of the dissolving companies’ policies.

Gulfstream reported a net loss of $22.6 million in 2020 and was ordered in May to eliminate 20,311 policies, including by canceling them before the end of their contract terms. Gulfstream was one of three financially troubled companies ordered to reduce their policy counts by more than 50,000 combined.

The others were Universal Insurance Company of North America and Southern Fidelity Insurance Company. Their troubles are widely seen as examples of financial headwinds that caused Florida-based insurers to post a combined net operating losses of $1.6 billion last year.

Numerous other companies are dropping customers or refusing to write new business in the riskiest areas of the state, including central and southern Florida.

Customers in those areas typically have nowhere to turn to but state-owned Citizens Property Insurance Corp., which added more than 100,000 new customers between February and May.

In 2019, before it slapped a “trade secret” designation on policy count data it submitted to state regulators, Gulfstream reported having nearly 60,000 policies, including about 10,000 combined in Broward, Palm Beach, Miami-Dade, Orange, Osceola, Lane and Seminole counties.