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Despite hundreds of insurance violations, president of upstart company could get $52 million deal from Citizens

Before launching an upstart insurance firm and donating $110,000 to Gov. Rick Scott’s campaign, the president of Heritage Property and Casualty Corp. repeatedly ran into trouble with Florida’s insurance regulators at previous companies he led. 

Now, one of those insurance regulators is Heritage’s chief lobbyist, and the St. Petersburg company might receive up to $52 million in a special deal with Citizens Property Insurance Corp.

Richard Widdicombe has run a handful of insurance companies in Florida in recent years, and at least two of them were cited for dozens of violations, ranging from “failure to pay claim timely” to “failure to comply with unfair trade practice requirements to making “misleading” advertisements.

Widdicombe, who declined to comment, was president of both Federated National Insurance Company and People’s Trust Insurance Company between 2001 and 2009. Both firms were cited several times by the Insurance Commissioner for violations. 

At Federated National, Widdicombe’s company was knocked by regulators in 2001 for a number of violations. Among them:

-Failing to return premium to consumers in a timely manner after cancelling an insurance policy.
-Using unlicensed insurance adjusters
-Failing to communicate with homeowners making claims and failing to pay claims in a timely manner. 

The company also had a high rate of complaints for its handling of Hurricane Charley claims in 2004, with one in five claimants complaining about service from Federated. 

The 2001 consent order was signed by then-Insurance Commissioner Tom Gallagher. Gallagher now works as a lobbyist for Widdicombe’s Heritage, which has spent between $60,000 aand $110,000 on lobbying Florida’s government in recent months. Heritage could reap a $52 million cash windfall if Citizens’ board of governor’s approves a special deal to transfer 60,000 policies to the firm, which was created only nine months ago. 

Scott’s office put out a statement saying that the $110,000 donation to the governor had nothing to do with the proposed $52 million deal. 

UPDATE 2:27pm: A spokesperson for Widdicombe provided the following statement about Federated

"The violations were relatively minor and had a small fine of $3,700.  These violations took place before Rich joined Federated, which was in Dec. of 1999.  They were corrected under his leadership, but the issues predate his employment with Federated National."

Sometime between 2001 and 2009, Widdicome joined People’s Trust Insurance as president. That company was forced to pay more than $250,000 for a laundry list of violations, including misleading homeowners with cheap insurance policies. After being suspended in March 2009, the company immediately stopped writing new policies. Widdicombe resigned in early 2009, in the middle of the OIR investigation. 

The company used unlicensed insurance agents and had an inexperienced management team, according to the Office of Insurance Regulation. 

“I am deeply troubled by these violations, and commend Commissioner McCarty for taking action,” then Chief Financial Officer Alex Sink said in a March 2009 statement

According to media reports, People’s Trust Insurance offered bargain basement insurance prices by selling policies over the phone instead of through agents and sending repairmen to fix damages rather than paying for claims. Widdicombe was apparently president of the company from 2008 when it was launched until early 2009, when investigators began asking questions.

"I just knew it wouldn't work," Widdicombe told state investigators, according to a 2009 Sarasota Herald Tribune article. "There's no way you can replace a thousand people's roofs with your own people." 

A spokesperson for Heritage said Widdicombe "did the correct thing" by resigning and cooperating with regulators.

Ultimately, the company did not collect enough surplus to be able to withstand a potential storm, regulators found. Regulators cited the company for “hundreds of violations,” and a 2009 consent order documents a laundry list of problems at the company—failure to maintain records, hiring claims handlers with no insurance experience and offering coverage that was too cheap to cover claims.

Insurance Commissioner Kevin McCarty, who authored the 2009 consent order, has signed off on Widdicombe’s current proposal to take out 60,000 policies from Citizens and transfer them to his new company, Heritage.

Like Heritage, People’s Trust made inroads in Florida’s government contributing to politicians. The company’s founder, Mike Gold, paid $25,000 to the Republican Party of Florida for a ticket to Gov. Charlie Crist’s 52nd birthday bath, according to the Sarasota Herald Tribune. "Thanks to what Gold claims was the handiwork of Senate President Jeff Atwater, he was seated at the head table next to the governor and his future wife," the Pulitzer-prize winning piece from the Herald-Tribune states.

Heritage paid $30,000 to the RPOF last October, and chipped in to $110,000 to Florida’s current governor two months ago. 

Citizens board is scheduled to vote this afternoon on the $52 million deal for Heritage.

Comments

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mrt

First Tom Gallagher sighting since September, 2006!! Congrats Tom!

whasup

Heritage sounds like some tea partier cover.

Scott Rothstein

People's Trust grew from the ashes of the large, financially stable property insurers who bailed out of Florida while ex-Gov Charlie Crist was mismanaging our state's property insurance market. The damage inflicted by Crist was substantial, and caused Citizens to grow into the largest insurer in the state as a result of HB 1-A in 2007. That rolled back Citizens rates to 2005 levels, forced insurers to double their wind mitigation discounts without adequate actuarial support, caused insurers to start the largest policy cancellation activity the state has ever seen, and resulted in an explosive growth of Citizens policies.

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