Florida lawmakers spent three hours on Friday questioning both current and former insurance commissioners about a 2022 report that detailed the movement of funds from Florida insurance companies to their out-of-state affiliates. The lawmakers sought answers as to why this report wasn’t brought to their attention sooner.
At the time the report was commissioned, Florida property insurers were advocating for legislative reforms, citing liabilities stemming from major storms and excessive litigation. However, the report indicated that these same insurers were sending billions of dollars to affiliated companies.
The Florida Office of Insurance Regulation (OIR) had commissioned the report, prepared by Risk and Regulatory Consulting, in 2020. It was published in March 2022, several months before a special legislative session made it more difficult to sue insurance companies. House Speaker Daniel Perez called the Friday meeting of the House Insurance & Banking Subcommittee following a Tampa Bay Times article that brought the report to light. That report revealed that insurers that had claimed financial hardship after Hurricanes Irma in 2017 and Michael in 2018 had paid $680 million in dividends to shareholders while simultaneously transferring billions to related companies.
The report also showed that 53 insurers reported a total of $61 million in net income, while their affiliates, often known as managing general agents (MGAs), reported $14 billion in income.
Republican Representative Susan Valdes asked David Altmaier, who was insurance commissioner when the report was commissioned, if he found the disclosures concerning.
“Red flags,”, Altmaier said.
“It certainly raised some red flags, which is why it was important for us to determine whether or not this was accurate,” Altmaier added.
Lawmakers questioned Altmaier and his successor, Michael Yaworsky, about why the OIR had not made the report public. The officials stated that the report was in draft form and wasn’t ready for general release.
“A draft is a very real thing to us, and it is an indication that it is not a completed product,” Yaworsky told the committee.
Under further questioning, Yaworsky mentioned discussions in late 2022 between OIR and Risk & Regulatory Consulting “to perfect the document.” He stated that he didn’t know the exact details, and the OIR was dealing with between six or seven companies in insolvency proceedings, as well as investigating other insurance companies. “I think it’s possible that they were simply overwhelmed,” he said.
Under oath, Altmaier said that the office became aware of transfers with affiliated companies in 2014. However, it wasn’t until 2021 that they were able to pass legislation specifically authorizing them to investigate affiliate payments.
“Even before we got this draft report, the office was very mindful that this allegation was out there. We were very mindful that we needed to increase our authority to answer these types of questions, not just for you, but for your constituents and our consumers and all kinds of other stakeholders,” he said.
Altmaier was unable to explain why, if he thought the report was so important, he didn’t follow up when the report was received by the OIR in 2022.
“Hindsight being 20/20, there’s probably some opportunities where I could have poked a little bit to make sure that this work was continuing. But, as the commissioner said, we were dealing with a lot,” Altmaier responded.
Representative Adam Anderson questioned to what extent excessive affiliate fees might affect policyholders’ premiums.
“There is a factor in there that is fees that you pay to your affiliates,” Altmaier replied. “If that’s being done correctly, then that’s a reasonable fee to have in the rates. One of the reasons why this work was so important to us was, if this is being abused, then it can have a detrimental impact on policyowner premiums. The challenge is, we didn’t fully answer that question during my tenure,” he said.
Yaworsky, who served as chief of staff to Altmaier between 2017 and 2021, was named Insurance Commissioner in early 2023. He stated he wasn’t even aware of the report until late last year.
That prompted several committee members to ask why he hadn’t shared the information from the report when he appeared before lawmakers. They wanted to know if the affiliate payments were directly responsible for the escalating property insurance rates, which have become the most pressing issue for Floridians, according to multiple polls taken over the past year.
Yaworsky pushed back, disputing that transfers explained why some carriers have become insolvent or have closed their businesses in Florida.
“I think the problem at its crux with companies is pretty easy to demonstrate — that it was … due primarily to litigation, but also natural catastrophes and the cost of reinsurance,” he said. “The companies went broke because rates simply could not be raised fast enough to accommodate that, and the market did not exist to support that. There’s not a lot of evidence that MGA fees or affiliate entity fees were the proximate cause of any insolvency.”
Another central point of discussion was what amount is considered “fair and reasonable” for companies to send to their affiliated groups. Florida law does not define a standard for what constitutes fair and reasonable.
The Tampa Bay Times requested the report in 2022, but didn’t receive it until late last year. Some committee members questioned the delay.
“There was so much going on in 2022 that this did not take the priority,” Yaworsky stated. “That’s a plausible explanation for what happened here.”
Some lawmakers expressed dismay.
“Our purpose here today is to find out if insurance companies have been allegedly ripping the citizens of Florida off. Why rates are so high? We want to find that out. And this report’s the state’s attempt at determining the answer to that,” said Republican Mike Caruso.
“Yet it’s still in draft form. It’s only seven pages long. It deals with data from 2017 to 2019. Today’s 2025. And I find it, as a legislator, that’s outrageous that we’re getting something that’s so antiquated and so full of flaws,” Caruso said.
Caruso and other lawmakers inquired whether the office planned to update the report. That remains uncertain at this time, although committee chair Brad Yeager said after the meeting that he believed lawmakers would push for it to happen.
The report cost $150,000, funded by a trust fund within the OIR, not taxpayer money.
In his State of the State address last week, Florida Gov. Ron DeSantis stated that the state’s homeowners’ insurance market is showing some stability, citing 130,000 new private policies over the past year, and that Florida had the lowest increase in rates of all 50 states. However, the Tampa Bay Times reported earlier this week that most of the nearly 1 million policyholders with state-backed Citizens Property Insurance Corp. will pay increased rates beginning on June 1. As the property insurer of last resort, it remains the largest insurer in the state in terms of policies written.
