Latest news with #AmericanPolicyholderAssociation
Yahoo
19-03-2025
- Business
- Yahoo
Study uncovers 'smoking gun' evidence of insurance execs' shocking behavior after catastrophe: 'It's fraud'
Evidence has surfaced that Florida insurance companies claimed monetary losses while redirecting billions of dollars to investors and affiliates. A study revealed that Florida-based insurers' executives took exorbitant amounts of money from their companies following Hurricanes Irma and Michael. As the Tampa Bay Times reported, the 2022 study has only recently been released after a two-year public record wait. The study explained how, during Florida's insurance market's post-hurricane crisis, company leaders distributed $680 million to shareholders and diverted billions of dollars to affiliate companies. With this money diverted and insufficient funds to pay insurance claims, Florida fell even deeper into an insurance meltdown. Doug Quinn, executive director of the watchdog American Policyholder Association, referred to the findings as a "smoking gun." "These companies are crying poverty in order to raise premiums or justify insolvency: 'It's litigation, it's fraud,'" Quinn said. "This is money shifting from their left pocket to the right, and crying poverty while their right pocket bulges." This news from Florida is concerning because it affects homeowners insurance coverage and costs during extreme weather events. Human activities like burning dirty fuel for energy create more planet-overheating pollution and extreme weather events, which put coastal communities at heightened risks. These worsening weather trends are prompting insurance companies to drop their coverage, leaving homeowners scrambling to rebuild their lives with few resources or options. It's disturbing to think about the wealthy few profiting from insurance companies while citizens' lives are devastated by intense storms. Unfortunately, Florida isn't the only place where homeowners insurance is a major issue. Do you think your city has good air quality? Definitely Somewhat Depends on the time of year Not at all Click your choice to see results and speak your mind. Insurance companies have tried to cancel coverage for people in high-risk wildfire areas in California and other states. Even families that can get coverage face extremely high premiums and are worried about paying for repairs after storm damage. To address the insurance issue in Florida, regulators asked lawmakers to establish clearly defined definitions of fair and reasonable dividends. After discovering unjustifiable fees and payments, regulators modified and canceled some companies' agreements. As an individual, something you can do to protect yourself from increasingly strong storms is to routinely inspect your home for damage and address potential issues before they become major claims. You can replace outdated building materials with upgraded materials like a fire-resistant roof and impact-resistant windows. Regularly review your claims history and coverage levels, shopping around for the best rates and comparing quotes from insurance providers in your area. Another idea is to contact your pro-climate representatives to advocate for homeowner insurance market reforms and disaster mitigation programs where you live. Join our free newsletter for good news and useful tips, and don't miss this cool list of easy ways to help yourself while helping the planet.
Yahoo
11-03-2025
- Business
- Yahoo
Report: ‘Broke' Florida insurance companies moved money; watchdog organization asks how?
TAMPA, Fla. (WFLA) — It started with a shocking report revealing Florida insurers were shifting millions to their executives, shareholders, and out-of-state operations all while claiming to be losing money. Now, the nation's largest watchdog organization for insurance policy holders is asking: how could Florida's insurance regulators allow it to happen? Close Thanks for signing up! Watch for us in your inbox. Subscribe Now 'We're watching from the doorbell camera, and we see the water start coming up in the road in the driveway on the porch. We saw fish swimming around on our porch,' said Byron Simpson, a South Tampa homeowner. When Simpson returned to his Westshore home following Hurricane Helene, a foot of water had flooded his home. Simpson quickly contacted his insurer and filed a claim. Then, the waiting game began. 'I got an initial small payment,' he said. 'But that was only enough to get the drywall started and the door repair started.' Simpson said he was forced to take out a line of credit from his retirement fund to continue the repairs. Olympus Pools owner was not truthful on construction license application: investigators 'I'm still fighting with the insurance company,' Simpson said. Simpson has new reason to feel frustrated. An 'internal analysis' by Florida's Office of Insurance Regulation, that became public just weeks ago, found that top insurance companies have been ripping off Floridians. The report reveals that from 2017-2019, after hurricanes Irma and Michael, Florida insurers paid $680 million to shareholders and transferred billions in profits to affiliate companies, all while claiming to be broke. 'Where did all that money go?' questioned Doug Quinn, American Policyholder Association's Executive Director. 'Now this report is the smoking gun that shows it it's been shifted over to affiliates up through the holding companies and to the investor holders.' The American Policyholder Association advocates for insurance customers. Last October, after an investigative report revealed some florida policy holders may have been denied payouts on legitimate claims after Hurricane Ian, Quinn said the APA contacted Florida regulators to demand a criminal investigation of insurance companies doing business in the state. Two years later, Quinn said there have been no fines, no arrests and no explanation why. 'How are they allowed to do that?' Quinn questioned. 'Where are the Florida regulators and law-enforcement who are supposed to be protecting the citizens of Florida?' As for Florida's Office of Insurance Regulation, a spokesperson told 8 On Your Side the agency continues to advocate for more oversight of insurers, despite not sharing their own report with state lawmakers. For homeowners like Byron Simpson, who paid premiums year after year only to feel abandoned by their insurance company when they needed them most, it's just not enough. 'I think there's a lot to be done investigating what's happening with insurance company because we need to maintain a level of insurance in Florida and have them held responsible for the money is that they're given to be honest brokers with that, and when the need arises to pay those monies back out,' said Simpson. Following the release of the study, lawmakers are now calling on Gov. Ron DeSantis for accountability and an investigation into Florida insurance companies. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Miami Herald
22-02-2025
- Business
- Miami Herald
Secret study found Florida insurers sent billions to affiliates while crying poor
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, according to a study obtained by the Herald/Times. The start of the state's insurance market meltdown came on the heels of those two storms between 2017 and 2019, as companies justified big rate increases to cover their losses. But those financial hardships don't tell the full story, according to the 2022 study that has never been made public and was released to the Herald/Times after a two-year wait for public records. The report, the most in-depth dive into the byzantine finances of Florida's homeowners insurance market, reveals that as the insurance market was ailing and companies were losing money, executives distributed $680 million in dividends to shareholders while diverting billions more to affiliate companies. Executives with most Florida-based insurers were removing so much money from their companies that they violated state regulations, the study's author concluded. The result left some insurers financially weaker — and potentially unable to pay claims — heading into the depths of the state's insurance crisis. State lawmakers never saw the report. The state's then-insurance commissioner and Gov. Ron DeSantis focused on legal reforms making it harder to sue insurers. And regulators have not repeated the study since, despite a recommendation from the report's author. The findings are a 'smoking gun' that confirms what has long been suspected in Florida's market, said Doug Quinn, executive director of the watchdog American Policyholder Association. 'These companies are crying poverty in order to raise premiums or justify insolvency: 'It's litigation, it's fraud,'' Quinn said. 'This is money shifting from their left pocket to the right, and crying poverty while their right pocket bulges.' State regulators say the insurance market is different today. In recent years, Florida Insurance Commissioner Mike Yaworsky has pushed for more oversight of affiliate companies. This year, he's asking lawmakers to change how insurers pay affiliates. While the report is an incomplete picture of insurers' money, Florida's Office of Insurance Regulation said in a statement, the study affirms that the reforms the office wants are warranted. But Paul Handerhan, founder of the trade group Federal Association for Insurance Reform, whose members include insurance companies, disputed the idea that executives were deliberately moving money around. 'This notion that they're fleecing their policyholders and offshoring the money to their affiliates is just not happening,' Handerhan said. 'None of these guys did this as a strategy.' Two-year wait During debates in the Legislature over how best to respond to the insurance crisis between 2018 and 2023, some lawmakers asked what role affiliate companies played. Rep. Hillary Cassel, R-Dania Beach, said lawmakers and observers had a lack of data about affiliates, known in the industry as 'managing general agents,' when they were voting on legislation. 'All of us informed on the issues knew [managing general agents] were a problem,' said Cassel, a former lawyer for insurance companies who now sues them. The Office of Insurance Regulation said in a statement that the study was not given to lawmakers because it was 'not a formal examination report.' It was produced months before lawmakers met in emergency legislative sessions in 2022 and left in a 'draft' status. 'Our office does not release every internal analysis of companies to the Legislature,' the office said. The Herald/Times requested the report in November 2022, but the office did not turn over the executive summary until December 2024. The affiliate structure is nothing new in Florida. Profits of insurance companies are limited by regulators to about 4.5 percent — hardly enticing to investors, considering the risk of hurricanes. However, insurance executives in Florida have used financial workarounds to reward investors and themselves. While the profits and executive compensation of the insurance company are capped, the profits of affiliate and parent companies are not. So executives create sister companies that charge the insurance company for basic services, such as claims handling, underwriting, accounting and issuing policies. (Large national insurers typically handle all of those services internally.) Arrangements between insurance companies and affiliates must be approved by the state, and regulations say they must be 'fair and reasonable,' which isn't defined in state law. Company structures can appear like a spiderweb of entities. When FedNat Insurance went insolvent in 2022, it was one of nine corporations under a parent company. When Southern Fidelity Insurance dissolved that year, it was one of six companies under the same umbrella, and its holdings included a hunting lodge maintained at a cost of $485,000 per year. State officials were investigating whether the company 'took active measures to conceal these costs' from regulators, according to an October insolvency report. Most insurers in Florida have similar arrangements, which are enormously lucrative for some executives who were the highest-paid in the nation in some years. But this type of setup can be easily abused and requires greater regulatory scrutiny, according to the National Association of Insurance Commissioners. That's because the owner of the insurance company also owns the affiliates, creating an incentive for executives to overcharge the insurance company for services. A deeper look Such abuses have been repeatedly found by state officials as the reason why companies go insolvent. In one 2009 insolvency, auditors wrote that executives were 'stripping the company of cash' as it was going out of business. The ratings agency AM Best last year found that affiliate relationships were the third-leading cause of insolvencies nationwide between 2000 and 2022, after catastrophe losses and fraud, Insurance Journal reported. Still, it's unlikely Florida regulators knew the full scope of insurance money-shifting arrangements until 2021, when lawmakers gave them the ability to demand more information from insurers and affiliates. Using that power, the state's then-commissioner, David Altmaier, paid a Connecticut-based consultant nearly $150,000 to parse through the information the companies provided. Several companies turned over incomplete data, according to the study. Between 2017 and 2019, the insurers in the study (minus a couple of outliers) showed a net loss of $432 million. Their affiliate companies showed a net income of $1.8 billion. With all 53 companies included, the industry recorded $61 million in net income, and affiliates made about $14 billion in net income, according to the study. Those figures likely include national carriers that also provide auto insurance. The author noted that the affiliates of Florida-based companies were profitable even after they injected $485 million back into the insurers and waived $208 million in fees during the three years, steps made to help keep the insurers afloat. In the author's opinion, 19 of the 30 Florida-based companies that provided data were paying fees to their affiliate companies that were 'not fair and reasonable.' The numbers in the study are 'eye-popping' and raise questions about why regulators would allow such financial arrangements, said Birny Birnbaum, executive director of the Center for Economic Justice and a former chief economist at the Texas Department of Insurance. 'It's unclear why [the Office of Insurance Regulation] isn't doing anything about it,' Birnbaum said. Regulators this year are asking lawmakers to define 'fair and reasonable' to include the actual cost of the service provided, the overall health of the insurer and how much in dividends were paid out. Regulators asked for that in 2023 but lawmakers rejected it, claiming it would 'upset the apple cart' of Florida's insurance industry. The office's proposed legislation would also require fees to affiliates be paid in dollar amounts, instead of percentages. Affiliates will typically charge the insurance company fees of between 20% and 34% of premiums, which results in more money for the affiliates when premiums go up. The office has canceled or modified some companies' agreements. In 2023, for example, one company's contract with an affiliate was canceled after regulators discovered that the affiliate was charging the insurer additional fees on top of the cost of the services being provided, according to the office.
