A lawsuit by state regulators paints the collapse of the Poe insurance companies as a case of monumental looting. Regulators say Poe executives paid out $143-million in awards and dividends to William F. Poe Sr., his family and company managers even as the firms hurtled toward bankruptcy —the costs of which are now being borne by all insured Floridians. Poe, Tampa's mayor from 1974 to 1979, has serious questions to answer. So do regulators who either looked away or slept through the largest insurer insolvency in Florida's history.
The Florida Department of Financial Services, the court-appointed receiver of the Poe companies, sued to recover money in an effort to help pay outstanding claims. It alleges that Poe executives transferred millions of dollars out of the insurance operation to pay Poe, his family and some executives. Poe Sr. received $25.5-million, regulators claim. His sons, daughters and entities in the Poe family name received an additional $50.7-million, authorities said. The payouts allegedly occurred in 2004 and 2005, as the Poe companies began to take huge losses from the eight hurricanes that struck Florida those two years. The Poe companies were hit with more than $2.5-billion in wind damage claims from those storms, suffering a net loss of $369-million. Those losses were passed onto Floridians, who pay an assessment of about $20 for every $1,000 in premiums for homeowners and automobile insurance policies.
Poe Sr., in a statement, said the suit was an attempt to intimidate him before his own lawsuit against the state for "unlawful destruction" of his insurance business goes to trial this year. Poe has said his financial picture was fine until Hurricane Wilma hit in October 2005. But the state's suit claims Poe's companies were moving money around well before Wilma in an attempt to protect themselves from creditors. It claims the companies kept commissions it did not earn, misrepresented its financial health and made "numerous" false or fraudulent claims to deceive the public and regulators.
Poe, a 76-year-old Tampa native, is widely admired for his accomplishments as mayor and for his civic contributions since. He is considered the father of Tampa's modern downtown. The public works he initiated broadened the city's economic and cultural base and its tourist appeal. He deserves the chance to clear his name. But the issue here is not Poe's legacy. It is the decisions Poe and others made that left $790-million in unpaid claims and 320,000 policyholders seeking new coverage.
The suit is an opportunity for the state to do what it should have done all along: Get a firm picture of Poe's finances during the run-up to the insolvency. What happened between 2004 and 2006, as Poe's affiliates were going under? Why did regulators not intervene earlier, or move to help stabilize Poe's businesses? Did contributions from the Poe family and board members to state political candidates during that time — to, among others, then-Chief Financial Officer Tom Gallagher and the two top candidates to succeed him — induce officials to change their role from watchdog to enabler?
The state needs to aggressively pursue its case. A spokeswoman for the Department of Financial Services said unpaid claims still amount to $123-million. The loss of Poe as a private insurer also skewed the market, throwing more home-
owners into state-run Citizens, the insurer of last resort. There is a chance to not only recoup money but to air the record and learn valuable lessons about the state's regulation of the insurance industry.