Florida lawmakers scrutinize insurers over hidden profits, rising rates
The Brief
Florida lawmakers are investigating whether insurers funneled money to affiliates while claiming financial losses.
A 2022 report found insurers reported losses, but related firms saw significant profits.
Officials say the report was never finalized, raising questions about transparency and rate hikes.
TALLAHASSEE, Fla. - Florida House members on Friday began digging into questions about property-insurance companies sending money to affiliated firms and shareholders while arguing the industry was losing money.
What we know
Florida lawmakers are questioning whether property-insurance companies have funneled money to affiliates and shareholders while claiming financial struggles. A 2022 report examined 53 insurers and found that, while insurers reported a net loss of $432 million from 2017 to 2019, affiliated firms saw net income of $1.8 billion. Lawmakers were not given the report when passing insurance reforms in 2022.
What we don't know
The status of the report remains unclear—regulators say it was only a draft, and a final version was never completed. It is uncertain whether insurers misrepresented their financial situation to justify rate hikes and legal protections. Officials have not provided a clear answer on why the report was not pursued further.
The backstory
Florida's property insurance market has faced turmoil, with companies pulling out, raising rates, or going insolvent. In a 2022 special session, lawmakers passed major changes to protect insurers from lawsuits. A recent Tampa Bay Times/Miami Herald report brought attention to the existence of the 2022 study, prompting renewed scrutiny.
Big picture view
Florida's insurance market is one of the most challenging in the country, with insurers struggling to stay afloat due to hurricane risks and litigation costs. Regulators argue that allowing companies to use managing general agents (MGAs) has helped attract investment to the market. Critics, however, believe the system has created financial loopholes that drive up consumer costs.
What they're saying
"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," said Rep. Mike Caruso, R-Delray Beach.
"If you are a commissioner of insurance, and you don't have a concern about perverse incentives that can exist in holding-company arrangements, MGAs and affiliate transactions, then you shouldn't have the job," Insurance Commissioner Michael Yaworsky.
"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," said House Speaker Daniel Perez, R-Miami.
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The Source
This story was written based on information shared by The News Service of Florida.
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