Herald Tribune: Fla. Cabinet questions insurance commissioner

May 11, 2010

The Herald Tribune published the following on May 11, 2010:

By Paige St. John

TALLAHASSEE – Insurance Commissioner Kevin McCarty today was chided by Chief Financial Officer Alex Sink for his handling of an insurance company that was allowed to write home policies despite financial problems.

McCarty admitted to allowing Northern Capital Insurance renew existing policies this spring despite financial statements that showed it was financially impaired.

He told Sink and other members of the Florida Cabinet his office did not realize Northern Capital was impaired until February and said the company wrote policies for only a few weeks after.

Even then it was allowed to renew only “select policies” while seeking a buyer, McCarty said. He asserted that insurance agents who sold those policies were aware the company was financially impaired.

“We were cautiously optimistic the company would be purchased,” McCarty stated. No buyer materialized and McCarty’s office last month asked that Northern Capital be shut down. It’s current policies will expire May 30.

Sink, who had called on McCarty to appear before cabinet members following stories in the Herald-Tribune, raised concerns about homeowners who bought policies only to discover their carrier was going out of business.

At one point, she asked McCarty if Florida consumers face added costs to bail out failed insurance companies “that were not adequately supervised by your office.”

McCarty did not mention Northern Capital was under supervision by his office since July 2009, and was allowed to renew policies until it was turned over for receivership in April. The Herald-Tribune has reported other carriers also were allowed to write new or renew existing policies while under financial supervision, including Edison Insurance and American Keystone.