Fla. Startup Insurer In Brawl With CFO Sink
Mar 9, 2009
National Underwriter--March 6,2009
BY DANIEL HAYS
NU Online News Service
Florida Chief Financial Officer Alex Sink announced she would suspend the license of new startup home insurer Peoples Trust for using call center personnel who were not licensed to sell insurance, a move drawing an angry response from the company.
Mike Gold, Peoples chief executive officer, said his firm began selling insurance using non-agents after getting clearance from Ms. Sink’s Department of Financial Services, and her move came after pressure from an agents group that contributed to her campaign.
Ms. Sink yesterday issued an order to show cause notifying Peoples if allegations of unlicensed sales are proven she “intends to enter an order suspending or revoking [the company’s] licenses and eligibility for licensure as a managing general agent, requiring you to cease and desist from transacting insurance through unlicensed employee practices, or to impose such penalties as may be provided…” under law.
CFO Sink in her announcement said the investigation revealed that People’s Trust MGA has allowed unlicensed agents to transact insurance, committing numerous violations of the Florida Insurance Code.
“People’s Trust MGA is violating the people’s trust by illegally allowing unlicensed agents to sell insurance in our state,” her statement said, adding that she has called on Florida Insurance Commissioner Kevin McCarty-who has primary responsibility for regulation, compliance and enforcement of statutes related to licensed insurers and the monitoring of insurer market conduct-to look into the matter.
She hopes Mr. McCarty will
“take action regarding this blatant violation.”
Mr. McCarty’s office said it would
review documents she had provided “along with the evidence the office has gathered during its comprehensive, ongoing investigation concerning People’s Trust Insurance Company’s compliance with the insurance code.”
People’s Trust is fully cooperating with the office to ensure compliance with Florida statutes, Mr. McCarty’s office said.
Mr. Gold said before his company obtained its license, he and his attorney met with Hazel Muhammad, chief of the bureau of licensing, in Ms. Sink’s office and explained he would be selling insurance over the Internet with forms that consumers could fill out and a frequently asked questions section providing details.
His call center people, he said, would do no more than read what was on the Web site. He said Ms. Muhammad agreed the arrangement was acceptable; however, a formal approval would take months, but he could have his attorney draw up an account of the meeting and send it to her. Mr. Gold said this was done Dec. 4, 2007 and that his firm asked to be notified if there were any questions about its interpretations of what transpired.
Mr. Gold said on March 6, 2008 his operation was certified and by October was “writing thousands and thousands of policies.” He said his success angered agents with rival insurers who were getting cancellations.
A complaint against him was filed by the Florida Association of Insurance Agents, which yesterday announced its “appreciation” for CFO Sink’s action.
“We are confident her actions have put a stop to further harm and we await similar results from the OIR regarding the numerous market conduct and Unfair Trade Practice allegations of People’s Trust Insurance Company,” the group announced.
Mr. Gold said that he had been visited by agents from both the OIR and CFO’s office and had shown them how his operation worked. He said he has now obtained licenses for most of his employees, and two weeks ago had license training completed for all his staff and intends to fight any action taken against him and clear his company’s name.
Ms Sink’s biggest political supporters, he said, were the FAIA.
Kevin Cate, a spokesperson for Ms. Sink, said he would not “dignify” Mr. Gold’s allegations of political pressure by responding to them.
“Our department doesn’t condone violations of the insurance code,” he said. As to the meeting with Ms. Muhammad, he said the CFO’s office would honor a request for documents.