A Florida House committee has advanced a bill designed to crack down on a controversial practice that allows property insurance companies to divert profits to affiliated businesses, effectively skirting state oversight and contributing to rising homeowner costs.
As reported by Lawrence Mower of the Tampa Bay Times and Miami Herald Tallahassee Bureau, the bill seeks to close a loophole that insurers have used to shift money to sister companies by overcharging for services like claims handling and policy writing. "You could have an insurance company with zero employees technically," Mower explained on The Ryan Gorman Show, "and yet be paying a sister company for services at inflated rates." These affiliates, largely unregulated, have reportedly earned billions while the parent insurance companies claimed massive losses.
An internal study by the Office of Insurance Regulation (OIR) revealed that while insurers lost hundreds of millions between 2017 and 2019, their affiliates made $1.8 billion in net profits during the same period. In multiple cases, the state found that failing insurance companies were stripped of cash by owners using affiliate relationships, leaving Floridians to foot the bill through assessments by the Florida Insurance Guaranty Association (FIGA).
The proposed legislation, introduced by Rep. Kim Berfield (R-Clearwater), would require insurers to disclose their financial relationships with affiliates and justify the costs of outsourced services. It would also empower OIR to reclaim excessive affiliate profits and potentially reduce insurance premiums across the state.
Despite bipartisan concern, the bill faces hurdles. It has no Senate sponsor and could stall amid Tallahassee’s powerful insurance lobby. "Will it pass? I wouldn't bet on it," Mower said, noting that although regulators support elements of the bill, political will may be lacking.
Listen to the full interview with Lawrence Mower on The Ryan Gorman Show.