As the insurance crisis spiraled, did Florida bury consumer complaints?

Yahoo

04-04-2025

TALLAHASSEE — In an extraordinary criticism of one state agency by another, Florida's Office of Insurance Regulation told legislators that a department led by then-Chief Financial Officer Jimmy Patronis may have buried thousands of complaints Floridians made against property insurance companies.
Patronis' office referred 5.2% of the property insurance complaints it received over a five-year period to regulators for possible violations of state law, indicating 'potential underreporting,' Florida's Office of Insurance Regulation wrote in newly disclosed memos obtained by the Times/Herald.
That low referral rate made it harder for regulators to police the industry, the memos said. Consumers lodged more than 52,000 complaints against property insurers during the period.
The memos, given to legislative leaders, were produced as part of a tug-of-war between two agencies and a bid to consolidate insurance oversight under one roof. Florida is the only state that splits insurance regulation between two agencies.
The consolidation push began before this year's legislative session and after Patronis announced he was leaving to run for Congress. He won a special election to the Panhandle seat Tuesday after serving seven years as CFO.
'This bifurcation has hindered the state's ability to adequately protect consumers,' one of the memos says.
The memos questioned the training of Patronis' employees, said that his office was missing complaints against pharmacy benefit managers and argued that consolidation would allow the state to better police insurers' use of affiliate companies.
House and Senate leaders haven't endorsed the idea of consolidating insurance oversight, and it's not in legislation introduced this session. Spokespeople for House Speaker Daniel Perez, R-Miami, and Ben Albritton, R-Wauchula, said they were open to the idea, however.
On one side is the Office of Insurance Regulation. It handles insurers' rate filings, polices their conduct and determines when companies are insolvent. It's led by the state's insurance commissioner, Mike Yaworsky, who is appointed by the governor and Cabinet.
On the other side is the Department of Financial Services. It oversees consumer insurance complaints, regulates insurance agents and takes over insolvent insurers. It's usually led by the elected chief financial officer, but that position is now vacant.
The split dates to 2003, and it has rankled insurance commissioners ever since.
Yaworsky for one is open to reform. He said he wanted 'a vigorous defense of consumers when they're approaching their state with an insurance problem.'
'I'm hoping that if there is discussion around this, whatever the outcome is, it leads to a really robust framework around ensuring that consumers are protected,' Yaworsky told the Times/Herald.
Yaworsky spelled out in the memos the downsides of splitting regulation, saying his office can see what insurers are doing but often doesn't hear about consumer complaints.
'It has hindered the state's ability to evaluate and regulate the entire insurance market,' the memos state.
Yaworsky has stepped up enforcement of the industry since DeSantis nominated him for the job in 2023. He's ordered insurers to stop gaming their rate increase requests to avoid public hearings, stopped them from hiring executives of failed companies and asked lawmakers for more enforcement powers.
Yaworsky's memos questioned the quality of the complaints his office was being sent by the Department of Financial Services.
The department is supposed to send complaints where companies might have violated state law. But of the complaints Yaworsky's office received, nearly half didn't name any violations, the memos said.
Such a low rate was a 'likely indicator' that staff in Patronis' office is 'not adequately trained to identify violations,' the memos state.
The 'issue is made even more stark,' the memos state, when looking at complaints pharmacists have made about pharmacy benefit managers, health care middlemen that have been blamed for skyrocketing drug prices.
In 2024, pharmacists made 142 complaints to Patronis' department about pharmacy benefit managers. The department closed 34 and referred 11 to the Office of Insurance Regulation. It's not clear what happened with the rest. Meanwhile, the memos asserted, the department wasn't capturing complaints made by patients because the department wasn't coding them properly.
Consolidating regulation would also give the Office of Insurance Regulation more oversight of insurers' affiliate companies, the office wrote. A 2022 analysis produced by the office and revealed by the Times/Herald last month found that insurance companies claimed to lose money between 2017 and 2019 while their affiliates made billions.
The Department of Financial Services did not respond to questions by the Times/Herald about the memos.
One reason why so few complaints are being forwarded to the Office of Insurance Regulation could be because Patronis' department doesn't investigate complaints if the homeowner has also sued their insurer. That fact isn't mentioned in the office's memos.
Patronis historically took a light touch to the insurance industry.
He did not come out in favor of Yaworsky fining an insurance company $1 million for Hurricane Ian violations last year. Patronis also pushed to seal records that would shed light about why insurance companies go out of business.
His office was supposed to investigate claims by insurance adjusters who said the companies they worked for manipulated their estimates to lowball homeowners. But Patronis' office never brought charges against the companies and never released the records about his office's investigations.
Two Republican state senators vying to replace Patronis said they saw the memos but had different conclusions.
Sen. Blaise Ingoglia, R-Spring Hill, called the lack of information-sharing 'very concerning.'
'By withholding some of that information, we're not doing what we are probably supposed to be doing,' he said. 'It's a disservice to the people who are making those complaints.'
Ingoglia said he didn't know enough to say whether insurance regulation should be consolidated.
Sen. Joe Gruters, R-Sarasota, said he spoke to Patronis about the idea, who 'thought it was a mistake, really, on numerous fronts.'
He said splitting regulation resulted in a 'checks and balances' of oversight.
He said the Office of Insurance Regulation was making a 'power move' by trying to assume control. He said the office already had access to the state's complaint data. (Yaworsky said the data is 'problematic' and makes it 'difficult' for his office to find violations of law.)
If anything, insurance regulation should be solely under the elected chief financial officer so 'that person can be held accountable,' Gruters said.