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The insurer agrees to actions, including fines, that will allow it to continue selling in Florida.
By LUCY MORGAN, Times Tallahassee Bureau Chief
© St. Petersburg Times, published February 1, 2002
TALLAHASSEE -- Bankers Insurance Co. of St. Petersburg has agreed to pay the state $1-million in fines and costs, remove two top officials and send written apologies to a state insurance regulator on whom the company spied.
The moves, approved Thursday by company officers and Insurance Commissioner Tom Gallagher, will allow Bankers to continue selling insurance in Florida.
Bankers and affiliated companies agreed to remove chairman Robert M. Menke from his current position for at least three years. They also banned general counsel G. Kristin Delano from all positions with Bankers or any affiliates. Delano also is prohibited from receiving severance pay or any compensation for his removal.
Menke will be allowed to remain as a director as long as Bankers complies with the other requirements. In addition, Menke and the company have written separate letters of apology to Kevin McCarty, the state insurance regulator whose privacy the company violated when it hired private investigators to spy on him in 1995.
The private investigator followed McCarty as he went about his private life and bugged his home telephone in an apparent attempt to find information that might be used to fire him.
The investigators determined that McCarty is gay, a part of his life that was not public knowledge at the time. McCarty currently is the state Insurance Department's deputy director of insurance services.
At the time Bankers decided to spy on him he was in charge of the state's Joint Underwriting Authority, an insurer of last resort. Bankers later lost a $16-million JUA contract.
The company has already agreed to pay more than $2.55-million to McCarty to settle a separate civil suit he filed against them in federal court.
Bankers admits improperly authorizing an investigation into McCarty's personal life and hiring a Tallahassee lawyer who, in turn, hired a private investigator who illegally wiretapped McCarty's home telephone. Bankers denies advance knowledge or participation in the wiretap.
Bankers has agreed to appoint three outside directors to its board. In addition, it must establish an independent compliance committee to monitor the legal and ethical conduct of the company. That committee will have three members, all of which will be independent outside directors approved by the State Insurance Department.
Bankers also agreed to establish a compliance officer within the company for at least three years. That person will have unrestricted access to all company documents and meetings and report directly to state insurance officials.
The $1-million that Bankers agreed to pay includes a $700,000 fine and $300,000 to cover the costs of state insurance officials who have been investigating the company for almost six years.
If Bankers is caught violating the terms of the agreement, the state can take action against the company, including the immediate suspension of its license to sell insurance in Florida.
The agreement marks the end of an acrimonious battle that began when Gallagher was insurance commissioner, lasted through the four years that U.S. Sen. Bill Nelson served in the job and ended more than a year after Gallagher returned to the post.
Company officers could not be reached for comment.