Florida Lawmakers Question Property Insurers’ Financial Practices
TALLAHASSEE — Florida lawmakers are delving into the financial dealings of property insurance companies, raising concerns about funds directed to affiliated firms and shareholders, particularly in light of industry claims of financial hardship. Discussions during a recent hearing highlighted a previously unreleased report that has fueled these investigations.
During a three-hour hearing, the House Insurance & Banking Subcommittee questioned state Insurance Commissioner Michael Yaworsky and former Commissioner David Altmaier about a 2022 report. This report, according to the Tampa Bay Times/Miami Herald, detailed the flow of money to affiliated firms. Lawmakers, who had not previously seen the report, expressed dissatisfaction, especially considering major legislative changes in 2022 aimed at supporting insurers.
Rep. Mike Caruso, R-Delray Beach, emphasized the central question: “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.” He criticized the report’s age and incompleteness, noting its basis in data from 2017-2019 and its draft status. Commissioner Yaworsky has stated that regulators would provide an updated report if the Legislature requested it. Caruso responded, “I think we want it. I think we’re all screaming for it.”
The 2022 report, prepared for the state Office of Insurance Regulation by Risk & Regulatory Consulting, LLC, analyzed 53 insurers, focusing on income, payments to affiliates, and shareholder dividends. The report indicated a net loss of $432 million for companies, excluding outliers, between 2017 and 2019. However, net income for affiliated firms reached $1.8 billion.
A key point of discussion was the role of managing general agents (MGAs), firms affiliated with insurance companies. These agents handle essential tasks like policy issuance and claims management. Rep. Hillary Cassel, a Dania Beach Republican and attorney representing consumers, questioned regulators’ inaction, highlighting the long-standing issues with MGAs. Commissioner Yaworsky acknowledged this concern, adding that this structure has allowed companies to obtain investors willing to put capital into an entity. Former Commissioner Altmaier noted the report’s significance, stating it “certainly raised some red flags.”
The report emerged during a tumultuous period for Florida’s insurance market, marked by companies dropping homeowners, increasing rates, and, in some cases, facing insolvency. A 2022 special session saw lawmakers pass measures, including those shielding insurers from costly lawsuits – a factor the industry blamed for losses.
Following the Times/Herald story, House Speaker Daniel Perez, R-Miami, directed the Insurance & Banking Subcommittee to hold hearings. He suggested in a News Service of Florida interview that insurers’ claims of financial hardship might be exaggerated. Perez stated that industry representatives told lawmakers that “they would have to essentially close their doors and move out of the state” without these 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, intends to meet with Commissioner Yaworsky to discuss the report further. The podcast with Perez and Albritton will be released on Sunday.
