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    Home » Florida Property Insurance Reform: A ‘Smoking Gun’ Report Demands Action
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    Florida Property Insurance Reform: A ‘Smoking Gun’ Report Demands Action

    insurancejournalnewsBy insurancejournalnewsFebruary 25, 2025Updated:February 25, 2025No Comments3 Mins Read
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    Florida homeowners have long suspected they were being overcharged by property insurance companies as rates skyrocketed and coverage diminished. A previously unreleased 2022 report obtained by the Miami Herald/Tampa Bay Times suggests those suspicions were justified.

    The ‘Smoking Gun’ Report

    The report indicates that insurer parent companies may have been diverting billions of dollars to affiliate companies, all while claiming financial losses. If the report’s findings are accurate, it suggests a system where insurance companies could siphon money from homeowners by charging higher rates while simultaneously claiming hardship.

    Doug Quinn, executive director of the American Policyholder Association, called the report a “smoking gun.”

    He added companies were shifting funds “from their left pocket to their right” and using poverty to justify rate increases or insolvency.

    Birny Birnbaum, executive director of the Center for Economic Justice, described the report’s financial figures as “eye-popping.”

    The report’s author noted that 19 of 30 Florida-based companies were paying “not fair and reasonable” fees to their affiliate companies.

    The Affiliate System and Regulatory Oversight

    The affiliate system, which allows insurers to move money between related entities, has long been identified as a problem. Despite regulators gaining the power in 2021 to demand information from insurers and affiliates, a 2017-2019 study found that while the insurers in the study had a net loss of $432 million, their affiliates reported a net income of $1.8 billion. When all 53 companies in the state were included, affiliates made about $14 billion.

    Interestingly, while insurer profits are capped at approximately 4.5%, there is no such limit on the profits of affiliates and parent companies.

    Legislative Action Needed

    The Office of Insurance Regulation did not share the 2022 report with legislators. The study was never made public. The executive summary was released to the news organizations after a two-year wait for public records.

    While Gov. Ron DeSantis recently announced a modest decrease in premiums for Citizens Property Insurance in one county, it’s not enough to make a significant impact for most Florida homeowners. Florida’s premium costs are among the highest in the nation.

    This year, Florida insurance regulators are requesting that lawmakers define “fair and reasonable” fees paid to affiliates. A prior attempt at this type of legislation failed in 2023. Another proposed reform involves requiring affiliate fees to be paid in dollar amounts, rather than percentages of premiums. This would prevent affiliates from profiting when premiums increase.

    With the information provided by this report, lawmakers now have the opportunity to enact meaningful reforms. Homeowners will undoubtedly be watching closely.

    Damage to homes near the Aero Club in Wellington, Florida on October 11, 2024. A tornado ripped through the area before Hurricane Milton made landfall in Florida two days earlier.
    Damage to homes near the Aero Club in Wellington, Florida on October 11, 2024. A tornado ripped through the area before Hurricane Milton made landfall in Florida two days earlier.

    Damage to homes near the Aero Club in Wellington, Florida on October 11, 2024. A tornado ripped through the area before Hurricane Milton made landfall in Florida two days earlier.

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