What happened: Arch Insurance alleges a Florida vacation rental company collected over $73,000 in travel insurance premiums but never passed the money on
Who's involved: Arch Insurance, its subsidiary Red Sky Travel Insurance, and Gulf Coast Property Management (a Bradenton, FL vacation rental firm)
What's at stake: At least $73,876.37 in unpaid net premiums, with a demand for triple damages totaling $221,629.11 under Florida's civil theft statute
Why it matters: The case is a warning shot for any insurer relying on third-party distributors to collect and remit premiums without robust audit controls
Where it stands: Complaint filed October 2, 2026, in the US District Court for the Middle District of Florida
"We've already closed our books on the timeframe in question."
That was the response, according to a new federal complaint, when an Arch Insurance subsidiary flagged that a Florida vacation rental company had been collecting travel insurance premiums from guests for over a year without sending the money through. The insurer had kept paying claims on those policies. The premiums, the complaint alleges, never arrived.
Arch Insurance Company and its subsidiary Red Sky Travel Insurance filed suit on October 2 in the US District Court for the Middle District of Florida, alleging that Gulf Coast Property Management (GCPM), a Bradenton-based vacation rental operator, collected at least $73,876.37 in net travel insurance premiums and allegedly kept the funds.
The arrangement started in February 2023. Under a written agreement, GCPM was authorized to sell Red Sky's "Trip Preserver" travel insurance product to guests booking vacation rentals. The program cost was 7.75% of each guest's total trip cost. GCPM could keep a 45% commission from the premiums it collected. The rest - the net premiums - had to go to Red Sky by the 15th of each month.
Red Sky is an Arch Insurance affiliate that provides travel insurance exclusively to the vacation rental industry, according to Arch's public statements. Arch underwrites the policies.
The complaint alleges the money stopped flowing no later than October 2023. GCPM allegedly failed to file the required monthly premium reports and failed to remit the corresponding net premiums - even as Red Sky continued paying claims submitted by GCPM's guests.
On January 23, 2025, Red Sky raised the issue directly with GCPM's chief operating officer. The complaint alleges that Red Sky told the COO it "had been paying claims submitted by GCPM's customers but had not received the corresponding premium reports" for guests who purchased travel insurance. Red Sky asked GCPM to produce the missing reports for October 2023 through December 2024.
According to the complaint, the COO acknowledged the problem, responding that "if this is true, this is a problem." He also acknowledged that both sides had "inquired about and followed up on this issue multiple times to ensure everything was working properly."
Then came the kicker. The COO allegedly told Red Sky that GCPM had "already closed our books on the timeframe in question."
No complete accounting followed, the complaint alleges.
One transaction captures the complaint's central concern. Red Sky says it discovered a previously unreported policy only because the guest filed a claim. That guest had paid a $930.62 premium. Red Sky approved and paid $2,557.86 in insurance benefits. GCPM never reported the transaction or remitted the $516.24 net premium, the complaint alleges.
The plaintiffs say this was not an isolated occurrence.
Red Sky terminated the agreement on February 24, 2026, and directed GCPM to immediately stop offering Trip Preserver, remove all references from its website, and provide a full accounting of every policy sold and every premium collected.
According to the complaint, GCPM did none of that. As of the filing date, GCPM's website terms and conditions still told customers that "Gulf Coast Vacation Rentals offers a third-party product, Trip Preserver," directed them to Red Sky's website for details, and stated that GCPM "may collect a percentage of the fee you pay for coverage as commission."
That continued use of the Trip Preserver name after termination is the basis for a federal trademark claim under the Lanham Act. The complaint alleges GCPM's ongoing references create a false impression that it remains an authorized seller of Red Sky's product.
The complaint identifies at least $73,876.37 in unpaid net premiums. Under Florida's civil theft statute, which allows triple damages where someone knowingly holds on to property that belongs to someone else after receiving a written demand, the plaintiffs are seeking $221,629.11 - plus attorneys' fees and costs.
The civil theft claim required a pre-suit demand letter and a 30-day window for the defendant to pay. The complaint states that Arch served that demand on May 20, 2026. GCPM, through counsel, rejected it on June 12, 2026.
In total, the complaint brings nine counts: breach of contract, three related payment claims, conversion (keeping property that belongs to someone else), civil theft, breach of an indemnity clause, a federal trademark claim under the Lanham Act, and a personal claim against GCPM's COO for breach of fiduciary duty.
The case sits at the complaint stage. None of the allegations have been tested in court, no response from the defendants appears in the filing reviewed, and no court has made any ruling on the merits.
For insurers and MGAs that rely on third-party distributors to collect and remit premiums, the case puts a sharp point on the exposure when reconciliation controls fail to catch a reporting gap for over a year - and what happens when the relationship breaks down.
The allegations in this complaint have not been proven, and no court has ruled on the merits of the claims.
