Florida Insurers Face Scrutiny Over Financial Practices
Florida property insurance companies have long argued that claims from hurricanes and lawsuits put them in a financial crisis. However, a 2022 report from the Florida Office of Insurance Regulation has brought forth a different perspective, revealing that some of these companies may have been transferring billions of dollars to affiliated companies and stockholders.
According to consumer advocate Doug Quinn of the American Policy Holder Association, the report, which was never made public, contains critical information.
“This would have been important information for state regulators to have before they voted away the rights of Florida citizens to recover their legal fees if they have to sue their insurance company, when their insurance company is found guilty of cheating them,” Quinn stated.
Quinn claims the report shows that some insurance companies reported significant losses while their owners were generating substantial profits. This was allegedly achieved by transferring funds or purchasing services from affiliated businesses with the same ownership.
These affiliated businesses, according to Quinn, experienced large profits while the insurance companies suffered financially, leading to significant rate hikes.
“And the suffering on the ground is amazing, and that’s all happening why?” Quinn questioned. “Because some fat cat insurance executives are stuffing their pockets at the expense of the people of Florida.”
The American Property Casualty Insurance Association (APCIA) responded to the reports with a statement from its Vice President of State Government Relations, Adam Shores.
“Recent news reports stating that Florida insurers ‘claimed’ to be losing money while their parent companies and affiliates made billions are very misleading,” Shores wrote. “The financial situation of parent companies and affiliates has no bearing on the losses insurers have incurred as a result of increased claims due to hurricanes and the impacts of litigation, inflation, and higher reinsurance costs.”
Despite the industry’s response, House Speaker Daniel Perez is moving forward with legislative hearings to examine insurers’ financial practices. This action has bipartisan support.
“We’re always trying to make sure insurance companies don’t game the system, that’s very very important,” said State Senator Blaise Ingoglia, a Republican on the Senate Banking and Insurance Committee. “I read the report, some of the conclusions I have questions on but it is a very worthwhile question to make sure companies aren’t siphoning off extra profits that we don’t see, especially if they siphon off profits and then go bankrupt.”
Democratic State Representative Fentrice Driskell echoed this sentiment.
“The House Democratic Caucus has been laser focused on that, we believe every Floridan has to be prosperous and safe,” Driskell said. “In fact, I sent two letters last week on behalf of the caucus asking the governor to investigate these property insurance companies that have been offloading profits all the while crying broke. We also sent one to the Speaker asking him to use his subpoena power to investigate the companies and were glad to hear from the podium he wants to do that. ”
While no date has been established for the hearings, any findings could potentially prompt changes to state law.
Complete Statement from Adam Shores of the APCIA
The complete statement from Adam Shores of the APCIA states:
APCIA looks forward to working with the Legislature during the 2025 Legislative Session and ensuring policy proposals are based on facts and not sensationalized reporting. Recent news reports stating that Florida insurers ‘claimed’ to be losing money while their parent companies and affiliates made billions are very misleading and lack an understanding of the reporting, dividend, and capital requirements for insurers. The fact is this: Florida insurers experienced several years of unprofitability as underwriting losses soared amid rampant legal system abuse and catastrophic hurricanes. Legal system abuse was a key driver behind the deterioration of the Florida insurance market. Since the Legislature and Governor implemented historic legal system abuse reforms in 2022-2023, the marketplace has steadily improved. Rates are stabilizing with many companies requesting rate decreases, and 11 new insurers have entered the marketplace. More benefits will emerge for consumers as the market continues to improve. It is also important to note that the media report was based on an outdated draft analysis with data from between six to eight years ago. Since then, the Florida Office of Insurance Regulation has gained more regulatory authority to review affiliated service agreements and has taken action to cancel or modify agreements that do not meet the fair and reasonable standard. Insurance is one of the most highly regulated industries, and we will work with the Legislature on efforts to enhance transparency and accountability while protecting Florida’s recovering marketplace for the benefit of consumers.
