Michael Gold said they forced his hand. A retired office products company executive, he watched the insurance premium on his home jump more than 400 percent over the past few years.
So this spring, he founded People's Trust Homeowner's Insurance, part of Florida's brave new property insurance world of small, nimble companies. He has about 25 employees, about $10-million in capital, and so far, he's signed up about 500 policyholders.
But he says he can write 100,000 policies within 18 months, and 500,000 within five years.
How? Spreading the risk and cutting costs. Boca Raton-based People's Trust is careful how many older and coastal homes it writes, and it has made the relatively unusual move of not employing agents or adjusters. Instead, homeowners buy their policies through the company's Web site, and if a claim is filed, a contractor is sent to the home for estimates and repairs.
"If the homeowner feels comfortable with the settlement, we authorize to get the work done," Gold said in a recent interview. "About 80 percent of nonhurricane claims are water damage from things like ruptured washing machine hoses." Contractors are not paid until the homeowner signs off on the work.
Basic coverage includes wind, but the company writes few policies in high-risk, coastal areas like Miami-Dade and Broward counties.
"We are dedicated," Gold said, "to turning the industry on its head."
The days when giants like Allstate, State Farm and Nationwide ruled Florida are over. Since January 2006, Florida regulators have licensed 25 new homeowner, mobile home and condo insurers. They have names like Safe Harbour, Olympus, Avatar and Magnolia.
At the same time, the Allstates and State Farms have stopped writing new homeowner business and are dropping policies.
Florida requires that new property insurers start with at least $5-million or 10 percent of their total liabilities. The unwritten goal: to prevent another Poe Financial. Three Poe subsidiaries grew too quickly and were forced into insolvency after the hurricanes of 2004-05, leaving Floridians an $800-million tab to pay off through assessments.
The new batch of startup companies is being closely watched to make sure they keep adequate capital. So far, complaints have been few, and the startups are hailed by regulators as key players in Florida's evolving insurance market.
But not everyone is convinced new is improved.
Brian Schneider, a senior insurance analyst at Fitch Ratings, said many new Florida companies appear to be highly leveraged and thinly capitalized relative to the amount of insurance they're writing.
"In a lot of cases, they're not even keeping a significant portion of their profits within the company," Schneider said. Money that should go into reserves leaves the companies, he said, either through commissions or other dividends.
"There's not a whole lot of reason to believe these companies will be around for a long time," Schneider added. "It's more of a plan on the hope that there won't be a huge amount of hurricane activity. And even if the companies go under, they only lose the amount of capital they put it.
"If you believe what the forecasters say, you need higher levels of capital to sustain an insurer in Florida."
Schneider's point seemed to be driven home when American Integrity, a 15-month-old Tampa insurer that has taken 90,000 policies out of state-backed Citizens Property Insurance, did not have the capital necessary last month to qualify for a $5-million matching grant to start selling homeowners business in Louisiana.
American Integrity chief executive Bob Ritchie argued that his company was trying to get approval from both Louisiana and Florida for a long-term strategy of writing policies in several states, and that he will try again.
The point, Ritchie said, is that smaller companies are finding a foothold across the Gulf Coast, and as long as they are careful, they can survive a busy hurricane season and rebound.
"Florida," Ritchie said, "is too large of a market to be ignored."
Tom Zucco can be reached at email@example.com or (727) 893-8247.