TAMPA – Florida made it tougher to sue insurance coverage corporations and supplied them extra state subsidies, as a result of they mentioned the trade was in monetary misery.
The backstory:
However lately launched state knowledge and a few impartial analysis from Weiss Scores name that into query.
For background, among the massive, established, nationally recognized residence insurance coverage manufacturers pulled again or pulled out of the Florida market years in the past after a rash of hurricanes. Smaller, lesser-known corporations stuffed among the void.
“You might have a hedge fund that’s anchored offshore. They might be home, however they’ll personal a holding firm, and the holding firm now owns 7-8-10 completely different corporations. One in every of them is the insurance coverage firm,” mentioned Doug Quinn who leads the American Policyholder Affiliation.
And a few of these insurance coverage corporations generate income, then pay their sister corporations – which can be a mixture of directors, adjusting companies, reinsurance companies, or restoration corporations. In doing this, cash strikes from the insurance coverage enterprise the place there are caps on earnings, strict laws, and danger of claims loss, to its sister corporations the place there aren’t.
“And pay attention, it’s all good so long as you’re honoring your insurance policies,” Quinn famous.
However in prior years, we have seen some insurance coverage corporations pay their sister corporations, as those self same insurance coverage corporations went broke, as competitors shrank, and costs shot up.
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Some state lawmakers didn’t know a lot about that after they handed reforms that made it tougher to sue insurance coverage corporations and supplied extra state subsidies.
What they’re saying:
“We’ve been attempting to resolve the issue with out the precise knowledge to help the data,” mentioned State Rep. Hillary Cassel.
Earlier than the reforms of 2022, state regulators examined 53 corporations from 2017-2019. In the event you take away the outliers, the businesses did collectively lose $432 million, however their associates made $1.8 billion. In the event you rely the outliers, the insurance coverage corporations made $61 million, whereas the associates made $14 billion. Once more, state lawmakers didn’t find out about that after they handed the 2022 reforms, as a result of the state workplace of insurance coverage regulation didn’t launch their findings till nicely after the reforms handed, in response to a Tampa Bay Instances/Miami Herald data request.
As belated and revealing as that state report could also be, it solely partially reveals insurance coverage corporations’ monetary dealings. It cuts off in 2019, and it solely tracked lateral funds to subsidiaries, not funds up the chain to holding corporations and proprietor teams.
A more moderen research by Weiss Scores checked out 2023. It discovered Florida insurers paid their associates $1.8 billion, plus one other $335 million paid out in dividends to traders.
ALSO: Residence insurance coverage nightmares proceed months after 2024 hurricanes
For perspective, Weiss discovered that affiliate funds had been greater than 20 p.c (20.4%) of their complete bills—4 instances larger than corporations in different states.
Weiss analysis additionally discovered that in 2021 corporations paid out $295 million in dividends whereas reporting steep losses. In 2022, it discovered $213 million paid in dividends whereas collectively reporting steep losses, and in 2023, one other $335 million in dividends whereas turning a collective revenue of $160 million.
“Corporations typically query the supply of our info, but it surely’s from their very own official statements they file with the states and the Nationwide Affiliation of Insurance coverage Commissioners. It’s damning knowledge, and I belief will probably be totally investigated by the legislature,” mentioned Weiss Scores founder Dr. Martin Weiss.
What’s subsequent:
In 2023, the legislature drafted laws to require insurers to reveal their monetary stability, earnings, and funds to their sister and guardian corporations however then eliminated it. They mentioned they had been involved about inserting extra burdens on corporations in monetary misery.
The Supply: FOX 13 reporter Craig Patrick researched the data for this text.
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