Florida Insurer Fails
Oguntoyinbo, Lekan, Black Enterprise
On Aug. 27, 1991, a Florida circuit court judge ended the 69-year-old life of Central Life Insurance Co. by signing an order to liquidate the state's last surviving black-owned insurance company. Central Life, a casualty of poor investments and bad management decisions, appears to be part of what the BLACK ENTERPRISE Board of Economists predicted as a shakeout of black-owned insurance firms during the 1990's (see "Reaping Profits From Chaos," June 1990).
The Florida Life and Health Insurance Guaranty Association, a state agency that services policyholders of failed insurance companies, has taken control of Central Life's assets. Central Life had 34,000 policyholders who paid $1.2 million annually in premiums. Just prior to its closing, the company had $6.5 million in reserve funds, but its bad investments produced a net loss of about $4.5 million.
Critics say that the company might have avoided its demise if it had been more willing to develop new product lines, expand its target market and change its business practices, which included collecting premiums door-to-door.
"When was the last time you saw an iceman or television repairman knock at your door?" harrumphed Dennis Threadgill, a senior attorney with the Florida, Department of Insurance. "Insurance companies have to adjust to the times."
But Central Life President Joseph B. Williams maintains that the company was a victim of state laws that caught them at a bad time and of racial discrimination by state insurance officials. "There are a number of companies doing business the same way what are still alive and well today," Williams says.
Company officials say their troubles began in 1984 when they attempted to boost their cas flow by purchasing a guaranty investment contract with a maturity level of $4. …