Insurance experts weigh in on Florida Lawmakers' insurance industry investigation

TAMPA, Fla. — Florida lawmakers are now looking at the insurance industry after a 2022 report became public.

It's a 7-page report from a consultant, Risk & Regulatory Consulting, LLC hired by the state of Florida. The Office of Insurance Regulation wanted to see how insurance companies manage money with their affiliates. The study looked at internal insurance data for 53 insurance companies from 2017 to 2019 after hurricanes Irma and Michael.

Doug Quinn from the non-profit American Policyholder Association told us, “The narrative was the Florida insurance companies were losing money because of fraud, because of frivolous litigation, and they needed to raise premiums. Premiums have skyrocketed. Some of the companies went under business. They left people twisting in the wind with no policies.”

But the report claims from 2017 to 2019, those 53 insurers reported a total of $61 million in net income, their affiliates known as MGAs reported $14 billion in income.

The Insurance Information Institute defines an MGA as a managing general agent. These are partners who work within insurance companies, with the ability to write policies. Many companies depend on these MGAs to write policies, in turn, those MGAs charge fees.

Mark Friedlander with the Insurance Information Institute said this is a common practice. He told us after the state’s investigation began, “people just don't understand how insurance works in Florida, that insurers typically use affiliates, or what's called Managing general agents, to sell their insurance products, they pay commissions to these managing general agents. This is a standard procedure, not only in Florida, but across the U.S.”

Quinn said, “We need to make sure that there is transparency in the financials of these insurance companies. You know that where the money is going really needs to be followed up on all the way through, through transfers to affiliates, up through holding companies into the investor groups, private equity funds, hedge funds that own these insurance companies. There needs to be transparency find out where the money is going.”

For her part, former deputy insurance commissioner Lisa Miller said the 2022 report is just a snapshot and is missing key details.