Florida state Sen. Joe Gruters, R-Sarasota, has sparked some controversy by pitching investment opportunities in a startup property insurance company in Florida.
This may be a good time for a new business venture by an insurer – with higher rates across the board but new statutory limits on litigation expenses. But an editorial in the Miami Herald this week called it “one of the most tone-deaf moves” that a lawmaker could make as homeowners struggle with escalating premiums while the insurance industry enjoys some cost relief, thanks to reform legislation approved in the last 18 months.
Gruters, an accountant by trade, reportedly sent potential investors, including some fellow lawmakers, information on startup Village Protection Insurance, promising potential returns of 165% over five years, the Herald and the Tampa Bay Times reported.
“What a great financial opportunity. Except, oops, it sure sounds like they’d be making money on the backs of suffering homeowners, their constituents,” the Herald editorial noted.
Sen. Jason Pizzo, a Democrat from Miami, said he declined to invest in the company, citing the optics of potentially profiting from a legislatively improved insurance market.
State Rep. Bob Rommel, R-Naples, chair of the House Commerce Committee, said Tuesday that he had not heard about the investment pitch. But he said that after the significant reforms passed in December, the market has greatly improved.
“Sen. Gruters is a smart man,” Rommel said. “There is an opportunity, if you have the capital to be in the insurance market in Florida right now. If I had an extra few hundred million dollars around, I’d probably do it.”
Gruters and his staff could not be reached for comment by Insurance Journal Tuesday morning. Village Protection Insurance is led by a former GuyCarpenter executive, the newspapers reported, citing an industry news source. The enterprise is hoping to raise at least $55 million from investors. The insurer would be managed by a managing general agent.
If successfully launched, it would be one of at least six property insurance companies that have plans to enter or re-enter the Florida market this year. In the last few months, the Florida Office of Insurance Regulation has approved Orange Insurance Exchange, Orion180 Insurance Co., Orion180 Select, Mainsail Insurance Co. and Tailrow Insurance Co.
**Article obtained from: Insurance Journal, Published 10/31/2023
https://www.insurancejournal.com/news/southeast/2023/10/31/746340.htm
