TALHASSEE – Florida House Speaker Daniel Perez announced Tuesday that he is ordering the committee to hold hearings to property insurance companies that will move billions of dollars to affiliate companies while claiming losses.
Miami Republicans were the first prime minister to launch the legislative meeting that began Tuesday, saying that insurance companies were using “creative accounting” to “hides” profits.
“A few years ago, the insurance industry came to Congress and said that businesses couldn’t compete in Florida without wiping out reforms,” Perez told lawmakers.
“I later learned reports that existed at the time but not disclosed to Congress. This might suggest that some insurers were using accounting tricks to hide their significant profits while saying they were in crisis.”
The Times/Herald revealed last month that state reports they had never seen before claimed that insurers claimed they would lose millions at the start of the state’s insurance crisis.
The report was prepared in March 2022, months before lawmakers met at the Congressional emergency session, making it difficult for insurance companies to sue.
Insurance companies, regulators and Gov. Ron DeSantis said the number of cases against businesses is high as the reason Floridians are experiencing a surge in premium.
Perez said the committee would be given a “all tools scope” for an investigation that would “issue subpoena, swear eyewitnesses, and hire external experts.” These tools are rarely used by legislative committees.
This comment received a standing ovation from lawmakers.
When asked about Perez’s comments, DeSantis said that state regulators are increasing the oversight of insurance affiliates, but he was open to do more.
“If there’s something we need to make sure we have transparency and proper monitoring, then that’s all for it,” said DeSantis, who oversees the Department of Insurance and Regulation.
However, he said he still supports changes that made it difficult for insurers to sue, and does not support laws that would reverse it.
“It was something we had to do,” he said.
Senator R-Wauchula Ben Albritton said the senators are “looking closely” at what a House hearing gets.
Last week, House Minority Leader Fentrice Driskell of D-Tampa asked Perez to order an investigation. She praised Perez’s decision on Tuesday, saying there could be “meaning legislation” over the next 60 days.
“We know that this council can act quickly when it is necessary,” Driskel said.
The American Property Casualty Insurance Association, a trade group representing insurance companies, said in a statement they will work with lawmakers.
The association “looks forward to working with Congress during the 2025 legislative meeting to ensure that the policy proposals are fact-based, and this is not a sensational report,” state vice president of state government relations, Logan McFaddin said in a statement.
The report was first requested by Times/Herald in 2022 and received last December.
It was commissioned by the Insurance Regulations at a cost of approximately $150,000 by the Insurance Regulations to investigate the use of insurance affiliate companies between 2017 and 2019.
The office limits insurance companies’ profits to approximately 4.5%. To avoid that, many companies have set up a web of affiliate companies that charge insurance companies at rates that could far exceed the cost of service.
Once the money leaves the insurance company, it is no longer under regulatory supervision – you cannot pay the claim.
The report showed that the insurers in the investigation (minus some outliers) had a net loss of $432 million over those three years. Their affiliates showed net profit of $1.8 billion.
The insurance company also spent $680 million on dividends to shareholders over the period.
The authors of the report concluded that 19 of the 30 companies surveyed had relationships with “fair and inappropriate” affiliates under undefined state regulations.
The Insurance Regulation Authority said the report was incomplete, but showed that the reforms it took into account as affiliate companies were justified.
This year’s office is asking lawmakers to have more information about affiliate companies, including the “actual costs” of services they charge to insurers.
Perez told reporters that the House had already submitted a request for records to the Insurance Regulation Authority related to the report.
“I believe in (the office),” Perez said. “They want to do the right thing, and they want to do the right thing for the consumer.”
The House Insurance and Banking Subcommittee, led by Rep. R-New Port Richey, will hold the hearing. Jager said he still doesn’t know what the hearing entails.
“I want to peel off the onion and see what’s there,” Jager said. “I’ll do whatever I need to find information.”
Times/Herald staff writer Romy Ellenbogen contributed to this report.
