Homeowner upset his People's Trust Insurance policy canceled three months after he got it

Company trying to manage its risk

WEST PALM BEACH, Fla. - Canceled! That's the notice thousands of customers are getting from their insurance company even though their coverage just started three months ago. The Consumer Watchdog found it's prompting a state review.

"This is my little resort," Gerry Gambino said relaxing in his backyard oasis.

Gambino worked hard to improve his home.

"Put on a new roof, put on hurricane windows throughout the house," Gambino said.

Citizens insured the home for years until People's Trust Insurance offered Gambino a lower rate.

"When you're on a budget you have to keep things as low as possible," said Gambino.

Three months into the new policy, People's Trust canceled it.

"I personally think this is a ripoff," said Gambino.

Consumers may not think it's fair, but it's perfectly legal under the law if the cancelation is done within 90 days of the effective date and a reason is given.  The policyholder must get 20 days written notice of the cancelation.

The Consumer Watchdog found 59 people complained to the state this year about People's Trust. Last year, the state received 130 complaints. 

The office of Florida's Chief Financial Officer said it found several instances where notices were not sent in time and in at least one case the notice did not have a specific reason for the cancelation. The CFO forwarded the complaints to the Florida Office of Insurance Regulation. That office is now reviewing the issues.

The Director of Operations for People's Trust, Josh Gibson, agreed to meet with the Consumer Watchdog to explain why it canceled policies and the state findings.

"It was done in error and should not have been canceled so we reinstated them," said Gibson of the state's findings.

People's Trust canceled 2,767 policies in South Florida, with 575 of the cancelations in Palm Beach County. The company insures in excess of 115,000 policies statewide.

Gibson says the company grew at an unprecedented rate in 2013, especially in the last quarter when Gambino's policy was written. Gambino's policy appears to have been canceled in time.

"Once we have the risk on the books we have to make sure it's the right risk," said Gibson.

People's evaluates risk with a home inspection after a policy is written. The company said doing that inspection before it issues the policy would not make financial sense because homeowners shop around for policies.

The majority of the recent cancelations were to manage the company's risk in the event of a catastrophe.

Now, just a few months before storm season, Gambino has to find a new insurer.

"We went through all this company's gymnastics. We've done everything they asked us to do. Right and they took our money and just walked away with no risk to them," said Gambino.

"How do you respond to that criticism from consumers?" we asked Gibson.

"The premiums they are paying it's all refunded on a pro rata basis. They are only paying for insurance at the time they had it. Certainly it was not our intent for a short term period prior to wind season coming up," said Gibson.

People's Insurance says it's still writing policies in South Florida, but says it is making underwriting changes to keep from having to cancel so many policies in the future.

People's Trust full statement:
"People's Trust has experienced very strong growth in the tri-county area in the last year, with even faster growth occurring over the past quarter in particular. As a result, People's Trust is implementing prudent exposure management strategies to more effectively diversify and balance the company's risk portfolio as we enter the 2014 storm season."

"These decisions are being made on a case-by-case basis and will impact a small percentage of our more than 115,000 policyholders across Florida.  We truly regret that these short term corrective measures inconvenience even a small percentage of our customers. We continue to write policies in the tri-county area that meet new underwriting guidelines as part of this strategy."

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