Florida House to Investigate Alleged Accounting Tricks by Property Insurers
Tallahassee, FL – The Florida House of Representatives Insurance & Banking Subcommittee is set to conduct hearings examining allegations. These allegations suggest that property and casualty insurers have been reporting net losses even as their affiliated entities have generated substantial profits.
Florida House Speaker Daniel Perez announced the upcoming hearings during the legislative session’s opening remarks, emphasizing the importance of addressing property insurance issues. “A couple of years ago, the insurance industry came to the legislature and said without sweeping reforms companies could not compete in Florida,” Perez said. “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.”
According to Perez, the subcommittee will have the authority to subpoena witnesses, place them under oath, and enlist external experts to aid the inquiry, as reported by AM Best. This investigation draws upon a 2022 analysis, initially reported by the Tampa Bay Times, which analyzed data from 2017 to 2019.
The analysis revealed that after Hurricanes Irma and Michael, numerous Florida-based homeowners insurance companies reported significant losses, which were then used to justify steep rate increases. However, the study also found that during this same period, these insurers paid out $680 million in dividends to shareholders while funneling billions to affiliated companies.
While the insurers themselves showed a net loss of $432 million, their affiliate companies reported a net income of $1.8 billion. This financial maneuvering has potentially weakened some insurers, rendering them less capable of meeting claims obligations.
The Florida Office of Insurance Regulation commissioned the analysis, which reviewed data from 53 insurers. Of those, 41 utilized managing general agents or attorneys-in-fact for policy administration and claims management.
Shiloh Elliott, press secretary for the Florida Office of Insurance Regulation, clarified that the analysis was an internal review rather than a formal report or study. The review determined that among 35 single-state and regional insurers, 19 had fee structures deemed fair and reasonable. Among the 18 national insurers, only one was found to have fair and reasonable fee structures.
Mark Friedlander, director of communications for the Insurance Information Institute, criticized the Tampa Bay Times report, claiming it relied heavily on cherry-picked information and inaccurate data. He added that consumer advocates and a few Florida legislators, characterized as “billboard attorneys” due to their practice of profiting from suing insurers, continue to promote a false narrative that Florida’s risk crisis was not caused by legal system abuse.
The period under review encompasses the years immediately before the collapse of Florida’s existing property insurance market, marked by soaring rates, insurer insolvencies, and withdrawals from the state. These market disruptions prompted lawmakers to enact regulatory and legal reforms in subsequent years. Since 2022, Florida has also strengthened its regulatory framework, providing the insurance commissioner with heightened oversight of managing general agents, according to Elliott.
