Insurer insolvencies are hard enough for policyholders and business executives, but local agents across Florida are also feeling the pain of a recent liquidation and may soon feel it of others.
The Florida Department of Financial Services told officers that invoices for unearned commissions for Gulfstream Property and Casualty Insurance Co., which was liquidated last summer, would be sent out starting this week.
The total commission to be reimbursed is about $4.1 million and must come from 985 agencies, said Kyle Ulrich, president of the Florida Association of Insurance Agents.
That’s an average of $4,162 per agency. But some Florida agencies have written hundreds of Gulfstream policies that were canceled before they expired and may face large bills.
“I think we’re probably getting a bill for around $20,000,” said David Radcliffe, branch manager and producer at Underwood Anderson Insurance in Gulf Breeze, Florida. “We have the money, but all of a sudden we have to write a check for it.”
Many agents in Florida in 2022 will also be asked to return unearned commissions from St. Johns Insurance Co. and Avatar Property and Casualty Insurance, which were deemed insolvent earlier this year. Lighthouse Property Insurance Co. was placed in receivership last week by regulators in Louisiana, and agents in Florida may be asked later this year to return their commissions on those policies.
And more insolvencies are expected before the end of the year, as many insurers continue to suffer losses from hurricane-related claims, roof replacements and legal costs.
“It’s not a fun time to be in the insurance business as an agent right now,” said Amber Bradford, owner of the We Insure agency in Navarre, Florida.
Bradford said she has written about 50 home insurance policies with Gulfstream, but has yet to see the bill from the Department of Financial Services.
“I imagine some agencies will be much more affected than us,” she said.
A mendicant insurance agency reportedly underwrote 1,600 policies with Gulfstream in recent years, agents said. Other high-volume producers in the state could face even greater expenses. Gulfstream had more than 35,000 policies in force when it wound up in July 2021, state officials said.
DFS said all invoices for unearned commissions should be sent to agents by the end of May. The department, which acts as receiver for Gulfstream, will work with agents who need help making the payments, the FAIA’s Dave Newell said in a bulletin to agents on Tuesday.
“Feel free to contact the receiver to work out a repayment plan,” the bulletin said. “Please post any questions you may have about this process, so we can get clarification from the recipient.”
Gulfstream also operated in Texas, Alabama, Mississippi and South Carolina, so agents in those states are also affected. A notice from the South Carolina Property and Casualty Insurance Guaranty Association said agents in that state will receive notices from Florida regulators regarding unearned commissions.
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