Florida House Speaker Orders Hearings into Insurance Report, Profits
TALLAHASSEE — Florida House Speaker Daniel Perez has ordered a committee to investigate property insurance companies after a report revealed potential financial irregularities. The move follows reporting by the Tampa Bay Times/Miami Herald.
In his remarks at the start of the legislative session Tuesday, the Miami Republican said that insurance companies may have used “creative accounting” to “hide” profits. His comments reflect concerns raised following the Times/Herald’s reporting on a state report.
“A couple of years ago, the insurance industry came to the Legislature and said without sweeping reforms, companies could not compete in Florida,” Perez told lawmakers. “We have since learned of reports — in existence at that time but not disclosed to the Legislature — that may suggest some insurance companies were using accounting tricks to hide substantial profits while telling us they were in a crisis.”
The Times/Herald reported last month that a previously unseen state report showed that insurance companies claimed losses at the beginning of Florida’s insurance crisis while their affiliate companies generated billions. The report was produced in March 2022, months before lawmakers convened in emergency sessions to make it harder to sue insurance companies. Insurers, regulators, and Gov. Ron DeSantis cited the high number of lawsuits against companies as the reason for skyrocketing premiums.
Perez said the committee would be given the “full range of tools” to investigate, including issuing subpoenas and putting witnesses under oath. These tools are infrequently used by legislative committees. The remarks received a standing ovation from lawmakers.
When asked about Perez’s comments, DeSantis said that state regulators have since increased oversight of insurers’ affiliates, although he was open to doing more. “If there’s things that need to be done to be able to make sure that we have transparency and appropriate oversight, I’m all for that,” said DeSantis, who oversees the Office of Insurance Regulation. However, he maintained his support for the changes that made it harder to sue insurance companies and would not support any legislation to undo them. “That was something that needed to be done,” he said.
Senate President Ben Albritton said that senators would be “watching closely” for the results of the House’s hearings. Last week, House Minority Leader Fentrice Driskell asked Perez to order an investigation. Driskell praised Perez’s decision and said there could be “meaningful legislation” over the next 60 days.
The American Property Casualty Insurance Association said they would work with lawmakers. The association “looks forward to working with the Legislature during the 2025 Legislative Session and ensuring policy proposals are based on facts and not sensationalized reporting.”
The report was first requested by the Times/Herald in 2022 and received in December last year. It was commissioned by the Office of Insurance Regulation at a cost of about $150,000 to examine insurers’ use of affiliate companies between 2017 and 2019. The office caps the profits of insurers at about 4.5%. To circumvent this, many companies set up affiliate companies that charge the insurance company for services at rates that can be much higher than the actual costs.
The report indicated that the insurers in the study showed a net loss of $432 million during those three years. Their affiliate companies reported a net income of $1.8 billion. Insurers also spent $680 million on dividends to shareholders during the period. The report’s author concluded that 19 of 30 companies it examined had relationships with affiliates that were “not fair and reasonable” under state regulations.
The Office of Insurance Regulation said the report was incomplete but showed that its reforms to affiliate companies were justified. The office this year is asking lawmakers to allow it to get more information on affiliate companies, including the “actual cost” of the services it charges insurers.
Perez told reporters that the House had already filed a request for records with the Office of Insurance Regulation relating to the report.
The House Insurance and Banking Subcommittee, led by Rep. Brad Yeager, will conduct the hearings. Yeager said he didn’t yet know what the hearings would entail.
