Start-up insurer and Scott donor bans business in 18 South Florida ZIP codes

Article Courtesy of The Palm Beach Post

By Charles Elmore

Published April 21, 2014 


A start-up insurer that gave $110,000 to Gov. Rick Scott’s political committee and won a lucrative contract to take customers from state-run insurer Citizens is telling agents as of Monday it will write no new business in 18 South Florida ZIP codes, including two in Lake Worth.

Heritage Property & Casualty Insurance Co. of St. Petersburg marks another example of a fast-growing Florida insurer hitting the brakes before hurricane season. People’s Trust Insurance of Deerfield Beach said it was canceling thousands of policies to reduce risk exposure, many of whom had signed up less than 90 days before.

“We’re not canceling policies,” said Ernie Garateix, a Heritage executive vice president. He said the company wants to avoid too much concentrated risk. He called that a “normal business practice” that many companies follow, related to making sure reinsurance or back-up coverage that insurers buy adequately covers potential payouts after a storm.

Heritage has grown from zero to 133,000 customers in less than two years to the become the state’s 11th largest property insurer by market share. It ranks in the top 10 in the three largest South Florida counties.

“Like all companies who are prudently monitoring and managing their exposures, Heritage Insurance has examined our new business growth patterns and exposure accumulation,” a company bulletin sent to agents said.

The ban includes eight Zip codes each in Broward and Miami-Dade counties. The Lake Worth Zip codes are areas west of Interstate 95.

Heritage ranked No. 6 in Palm Beach County with 16,127 customers as of Jan. 1, tripling its market share in just one year, up from 23rd with 5,092 customers.

At the start of 2014 Heritage ranked No 7 in Broward with 17,266 policies and No. 8 in Miami-Dade with 11,393 policies.

Heritage gave $110,000 to Scott’s Let’s Get to Work committee in March of 2013, two months before the Citizens board approved a controversial deal to give the company up to $52 million to take up to 60,000 customers. Scott appoints Citizens board members and helps oversee its management.

It was a sweetener payment most “takeout” companies do not get, but Citizens executives said the money was justified to help with expenses, including reinsurance close to the start of hurricane season.

At the time, Heritage officials said they were offering many Citizens customers better coverage, but acknowledged the money could be spent on, among other things, salaries. Citizens officials said Heritage netted about $30 million on the deal.

Citizens remains the state’s largest property insurer, but said this week it has shrunk to 938,000 customers from 1.5 million a couple of years ago. It is still the market leader in Palm Beach County as well, but is down to about 100,000 customers from a peak near 150,000.