‘Regulators take gamble on discount insurance’ (April 19)

The following is an analysis that is part of a graduate thesis. Learn more.

St. John must have found interesting many aspects of People’s Trust Insurance, a new insurer in Florida, and in this story she seemed to try to discuss all them in fairly equal proportion. The result was a blitz in which nothing stood out as a more important claim for readers to take away. As such it was difficult to track the issues except at broad levels: “How does People’s Trust Insurance work?” “How did the company begin?” and “What got it into trouble?” It was also difficult to find conclusions in the story, or even try to read some conclusions into the text.

The results were almost tautological, but, at the same time, fairly well sourced. To the first issue, “How does People’s Trust insurance work?”, St. John provided details about the company’s “unorthodox” approach to insurance (5). Rather than sell policies through roving agents, the company relied on a call center; rather than send checks to homeowners who submitted claims, the company planned to send its own carpenters (4).

These details more or less combined into a “conclusion” about how the company worked. The details clearly were an important part of the story for St. John, so they need to have some place in an analysis of the story’s argument. St. John never cited a source for the details of the company; they might have come from the owner, Mike Gold, whom she quoted at length on many aspects of the story except this one.

So the only apparent route to go for readers was to take the description of the company as an argument on St. John’s authority. With such a fairly basic set of facts, that seems fairly safe. In any case there didn’t seem to be a dispute about the facts.

Of apparently equal importance to St. John was the issue of how the insurer began, in terms of the genesis of its strategy and its entrance into the market.

According to St. John, Gold “got into property insurance by happenstance” (14). He had moved to Florida and bought a house but was “outraged at what companies charged to insure it” (15). So he started his own company, “courted the media and politicians,” and soon received approval from regulators, who had “ full knowledge that its plans were unorthodox,” to start selling policies (15–17).

One of the paragraphs that trace the beginnings of People’s Trust begins with a citation to “As Gold tells it” (17), but no other references were given. Readers are probably left uncertain: Was this the point at which St. John began asking Gold for details or did she only mention him now, after relying on him for the historical details? In the former scenario, there was evidence for accepting the description of People’s Trust as offered in that it came from the owner. In the latter scenario, though, once again readers would have had to take the description on St. John’s authority. Frustratingly for readers, St. John never clarified which scenario was true.

St. John’s discussion of the third issue, that of how People’s Trust got in trouble, was more clearly structured and sourced. For one, it offered a clear conclusion, albeit a simple one: “Gold quickly ran into problems” (22). Granting that there could be some middle ground on what constitutes a “problem” for an insurance company, St. John demonstrated Gold’s problems fairly well.

Her first piece of evidence, though, was not sourced. She said that the Florida Association of Insurance Agents

began to document scores of violations, and by November 2008, turned over large boxes of evidence to state regulators. (23)

The association alleged that People’s Trust “allowed unlicensed employees to sell insurance,” wrote policies that “did not fully cover homeowners” for some disasters, and charged homeowners so little for policies that it would not have had enough reserves to pay claims (24–25). St. John did not cite how she knew this information or why it would give an insurer “problems” — was the association a legal entity? Did its word carry weight?

In fact, the association’s word apparently was not problematic for People’s Trust, for, St. John says, “the rest of that year, nothing happened” (26).[1]

She also justified her claim that Gold ran into problems by noting parallel investigations into his company by two state agencies. Her evidence for saying these investigations caused trouble for Gold was “early drafts” of reports from the Office of Insurance Regulation, which “randomly inspected” People’s Trust policies and found that “every one contained at least one violation of state law” (31). She reported, seemingly from the draft investigations, that a former Gold employee gave statements to regulators under oath against Gold. Finally, St. John said regulators suspended and fined People’s Trust in April 2009 (40). Each of these facts provided weight to the claim that whatever regulators had against Gold caused him problems; but to top it off, she noted that Gold, rather than deny the allegations outright, defended himself in a YouTube video (34).

So readers could accept with confidence that Gold and his insurer ran into problems. Admittedly, St. John’s conclusion wouldn’t have set the world afire, but she substantiated it well, and readers might have found that more important than a grander, but harder to accept, argument.


  1. St. John wrote confusingly here. She said the insurance association submitted its evidence to regulators in November 2008 (23), and that “for the rest of that year, nothing happened.” But then she wrote that “by late 2008,” the state Department of Financial Services “started a slow methodical investigation” — indicating that something very clearly did happen by the end of the year.  ↩

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