Sarasota-based insurer Gulfstream Property and Casualty Insurance Co. has agreed to liquidate after going insolvent.
In an order agreed to by Gulfstream late Thursday, the Florida Office of Insurance Regulation recommended that the state take over Gulfstream. Once approved, Gulfstream customers have 30 days to find new coverage.
“Especially during hurricane season, (the Office of Insurance Regulation’s) priority is to ensure consumers have continuous access to coverage,” Alexis Bakofsky, the regulator’s spokesperson, said. The regulator ‘has worked closely with other private carriers to secure consumers streamlined options for replacement coverage in the private market.”
“A substantial number” of Gulfstream customers will be offered coverage through Florida Peninsula Insurance Co., its affiliate Edison Insurance Co., Homeowners Choice Property Casualty Insurance Co. and its affiliate TypTap Insurance Co., according to Bakofsky.
The move for liquidation comes less than a month after the regulator placed Gulfstream under its supervision for a 90-day period to “wind down” the company. This process is typically confidential, but the regulator opted to make it public.
Gulfstream fell below the state’s required minimum for funds it must keep on hand to pay claims, called “surplus.” It surplus dropped by 20 percent to $20 million from 2019 to 2020. It pulled in $17.1 million last year in investments to meet the state minimum, but dropped below it’s required minimum again June 21.
The company had a $35 million underwriting loss in 2020.
Gulfstream’s woes are in line with larger instability in the Florida property insurance market. Florida insurers last year reported $1.57 billion in combined underwriting losses, spending more on claims and expenses than they brought in through premiums. Citizens Property Insurance Co., the state-run insurer of last resort, is expanding to its highest levels in years as it takes on policies that others insurers are shedding.
Gulfstream was one of three companies given permission earlier this year to offload a combined 53,200 policies, 20,311 of which were from the Sarasota insurer . It had one of the quickest timelines to right its finances of the affected companies, with its affected customers having 45 days to find another insurer.
Shortly after, its financial stability rating was withdrawn by Demotech Inc., a private company that rates many Florida insurers. Gulfstream previously had an “A” grade, for “exceptional.”
The Florida Department of Financial Services needs to give approval before the company can officially go through the receivership process and liquidate.
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Gulfstream customers, Bakofsky said, should check with their insurance agent to find replacement coverage. If they are unable to do so, they will likely find coverage through Citizens. Affected customers can call the Florida Department of Financial Services’ insurance helpline at 877-693-5236 or email Consumer.Services@myfloridacfo.com.