Florida House Scrutinizes Property Insurers’ Finances
TALLAHASSEE — Florida House members are investigating the financial practices of property insurance companies, questioning alleged transfers of funds to affiliated firms and shareholders while the industry claims to be losing money. The inquiries come amid continued high rates and concerns about insurers’ handling of finances.
During a three-hour hearing, the House Insurance & Banking Subcommittee questioned state Insurance Commissioner Michael Yaworsky and his predecessor, David Altmaier, regarding a 2022 report. The report, which had not been provided to lawmakers or released publicly until recently, reportedly detailed financial transactions between insurance companies and their affiliated entities.
The hearing followed a Tampa Bay Times/Miami Herald story about the report. Lawmakers expressed concern that they were not given the report earlier, especially given that the Legislature passed significant reforms in 2022 to support insurers. Yaworsky and Altmaier explained that the report was a draft and not a finished product.
“Our purpose today is to find out if insurance companies have been allegedly ripping us off, ripping the citizens of Florida off, why rates are so high. We want to find that out,” said Rep. Mike Caruso, R-Delray Beach.
Caruso also criticized the report’s age and the limited scope of data it covered. Yaworsky, who took office in 2023, noted that regulators would provide an updated report if the Legislature requested it. Caruso responded that a new report was urgently needed, given the public’s clamor for answers on why insurance rates are so high.
The 2022 report, conducted by Risk & Regulatory Consulting, LLC for the state Office of Insurance Regulation, examined 53 insurers, focusing on factors such as income, payments to affiliates, and shareholder dividends. The report indicated that, excluding “outlier” companies, those insurers collectively reported a net loss of $432 million between 2017 and 2019. However, affiliated firms showed net income of $1.8 billion during the same period.
Much of the discussion centered on managing general agents (MGAs), which are companies affiliated with insurance providers that handle daily operational tasks. Rep. Hillary Cassel, a Dania Beach Republican and attorney, questioned regulators’ lack of follow-up on issues relating to affiliates after receiving the report. Yaworsky acknowledged concerns surrounding these arrangements, emphasizing the need to monitor potential incentives and to prevent any perverse financial structures.
Yaworsky added that use of MGAs has helped attract investors to the volatile insurance market, but that it presents a “countervailing balance” between the interests of investors and the industry.
“The fundamental fact of our marketplace is that it is not one that companies inherently, naturally want to be involved with, especially the companies we want the most to be involved,” Yaworsky said.
Altmaier, who left his position in December 2022, mentioned that he discussed the report while in office. Both he and Yaworsky stated that the report required further work, though neither could specify why it was not pursued more diligently. Altmaier noted some “red flags” that needed further investigation.
The report surfaced amid upheaval in Florida’s insurance market, including companies dropping policies, raising rates, and some facing insolvency. In 2022, lawmakers approved significant changes during a special session, including measures to shield insurers from costly lawsuits—an issue the industry blamed for losses.
Following the recent news story about the report, House Speaker Daniel Perez, R-Miami, instructed the Insurance & Banking Subcommittee to hold hearings. Subpoenas and sworn testimony could be part of the process. Perez noted that the report raised questions about insurers’ arguments that prompted changes in state laws. During a recording of the News Service of Florida’s “Deeper Dive with Dara Kam” podcast, Perez said industry representatives suggested that they would have to “close their doors and move out of the state” without those legislative changes.
“And now we believe there’s a potential that those cries were not real, that their profits were higher than expected and potentially there was some sort of shell game being played,” Perez said.
Senate President Ben Albritton, R-Wauchula, also said during a recording of the podcast that he will meet next week with Yaworsky to discuss the report, emphasizing the need to determine the accuracy of the findings.
Senior writer Dara Kam contributed to this report.
