A report that insurance companies were sending tens of millions of dollars in profits to their parent companies was hidden by the state of Florida, which allowed the companies to claim they couldn’t make money in Florida unless lawmakers gave them an advantage. This is according to Carl Seibert of the Sun Sentinel.
By Scott Maxwell | [email protected] | Orlando Sentinel
Imagine this scenario: someone comes to you, pleading for help. They explain that despite their best efforts, they end up $500 in debt each month. Without looking deeper, you might feel sympathetic and offer some assistance.
Now, imagine that after years of providing support, you finally examine their financial records. You discover that while they are indeed reporting a $500 monthly deficit in Florida, they’re simultaneously transferring $10,000 each month to an account in New York. This money funds a luxurious lifestyle in the Big Apple, all while the person claims to be impoverished in Florida.
You would likely feel misled, betrayed, and angry. This is precisely how Floridians should feel after learning about the insurance industry in their state.
The Tampa Bay Times and Miami Herald conducted an investigation that uncovered the fact that Florida insurance companies, while complaining about financial difficulties and charging some of the highest rates in the nation, were funneling billions of dollars to affiliated companies elsewhere.
“While Florida insurers claimed to be losing money in the wake of hurricanes Irma and Michael, their parent companies and affiliates were making billions of dollars,” the Times/Herald article reported. It continued, stating that while companies reported losses, “executives distributed $680 million in dividends to shareholders while diverting billions more to affiliate companies.”
This situation is made even more perplexing by the fact that Florida officials were aware of this financial manipulation years ago. A report costing $150,000 of taxpayer money detailed these practices, yet the state hid the report. The Times/Herald requested the document in November 2022 but didn’t receive it until December 2024—after Republican lawmakers had already passed two rounds of financial benefits for the allegedly struggling industry.
Such actions are highly questionable. Reports funded by public money should be accessible to the public, not treated as private assets by politicians and bureaucrats eager to favor their insurance-lobbyist allies.
The Money-Siphoning Scheme
The insurance industry’s money-siphoning strategy is intentionally complex. However, to simplify, imagine a national insurance company, ACME National, wanting to operate in Florida. They establish ACME Florida.
ACME National then charges ACME Florida for a variety of services, including claims handling, underwriting, and inflated fees for accounting and policy-issuing services. In essence, ACME pays ACME… and then claims it’s short on funds.
As one consumer expert told the Times-Herald: “This is money shifting from their left pocket to the right, and crying poverty while their right pocket bulges.”
The report showed that while over 50 companies reported a combined net income of only $61 million in Florida, the income of those companies’ affiliates exceeded $14 billion.
Despite this, insurance lobbyists—and their allies in the Legislature and governor’s office—used the narrative of struggling insurance companies to justify offering the industry financial benefits, including subsidies, removing people from public insurance, and making it more difficult to sue insurance companies when legitimate claims are denied.
Rate Increases Despite ‘Reform’
Following the passage of this “reform,” Donald Trump called Florida’s insurance market “the worst Insurance Scam in the entire Country!”
At the time, many, including myself, predicted that these benefits would do little to help homeowners, particularly since lawmakers didn’t mandate that insurers lower rates in exchange for these benefits. Unfortunately, those predictions proved accurate. Since the so-called “reform” took place, rates have continued to climb.
Reports from the South Florida Sun-Sentinel and Orlando Sentinel demonstrated that, for nine consecutive quarters after Gov. Ron DeSantis signed the “reform” measure, the average homeowner’s premium increased. An additional Sun-Sentinel report discovered that from 2022 to 2024, home insurance costs in Central Florida alone rose by 40 percent.
Where to Find the Truth
This information hasn’t come from state insurance officials or elected representatives, who appear to be concealing it. Instead, it’s from the work of dedicated newspaper journalists.
Despite all of this disturbing information about deception and rising rates, it’s crucial to remember that insurance costs in Florida should be higher compared to most of America due to the elevated risks from hurricanes, rising sea levels, and flooding, even though some politicians may deny this reality.
The lawmakers’ reform did make Florida a more appealing market for insurance companies. The previous shortage of companies suggests that it wasn’t simple to generate profits, even with money being redirected to affiliates. While it’s positive that more companies are entering the market, Florida must do more to offer real relief to homeowners.
To begin, if fraud is a significant issue, fixing the problem involves strengthening investigations and enforcement, something Florida has never done. Making it harder to sue insurance companies for many policy-paying customers isn’t the answer.
For serious rate reductions, Florida must take one of two costly actions:
Options for Rate Relief
- Increase Investment in Citizens: Expand Citizens, creating a state-run insurance program, similar to Medicare, that is accessible to most people for property insurance. This option gains support from Republicans and Democrats but would require measures to prevent abuse.
- Use Subsidies in Exchange for Rate Reductions: use tax dollars to further subsidize the market, perhaps through more robust underwriting of reinsurance or direct subsidies, but only if rate cuts are guaranteed and the industry is more transparent.
Alternatively, Florida can choose to do nothing and watch rates continue to skyrocket.
Giving benefits solely to the industry is a bad move, and hiding public information is never the right answer. On the contrary, it indicates that the state knows it is doing something wrong.
