Florida insurers steered money to investors while claiming losses, study says

https://www.tampabay.com/news/florida-politics/2025/02/22/florida-insurance-profits-desantis-regulation-investors-crisis/

by howard941 • 1 year ago

166 110 1 year ago

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nine_zeros2• 1 year ago

But of course - I don't understand why people are forgetting that when companies raise prices/cut benefits, it is not because of actual losses but because they want to return more of their revenue to shareholders than to customers or employees.

It is a flawed model that is sucking society dry but this is how America is set up. There are only a few ways to beat them - some of them involves lawmakers passing laws that protect people over investors. Ain't happening with the current elected officials.

yummypaint• 1 year ago

It's all predicated on having competition, which of course companies hate. Once a company becomes both a monopoly and "too big to fail" it isn't really a company anymore, but functionally a piece of government run by unelected profiteers. If elected officials did their jobs and maintained something resembling a free market everything would be so much better.

nine_zeros2• 1 year ago

If elected officials did their jobs and maintained something resembling a free market everything would be so much better.

Not happening for the next 4 years.

Absent government help, people need to take matters in their own hands. Build unions and co-ops. Customer unions, patient unions, homeowners unions - not just employer unions.

Band together and buy reduced price/better termed insurance.

Ultimately, shareholders must take a few years of losses - that's just business.

redserk• 1 year ago

I'm confused at the "free market" implication here. What resembles the free market has been deciding "Florida isn't worth it" and companies have been pulling out in response.

I'll concede in that a few bad regulations have accelerated this trend but these regulations, even if repealed, can't change the fact that tropical weather is becoming more severe.

After all, there are many other states that have a lot lower likelihood of town/city-level destruction in a year.

throwaway57522• 1 year ago

"It is a flawed model that is sucking society dry but this is how America is set up."

This article is about a problem of how Florida, specifically, is set up.

To the downvoter - perhaps you didn't read the article, don't know about Florida's P&C regulatory problems, or wanted to make another point. But from the article:

"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."

Florida knew this, and was surpressing this, because the state executive branch is corrupt and in a state of regulatory capture.

acdha4• 1 year ago

Yes, and that’s why it’s relevant: Florida has a major problem which can’t be solved by pretending really hard that it doesn’t exist, and the legislative climate won’t allow actual fixes. Republicans have ensured that climate change is hitting everyone as hard as possible, and blocked corporate accountability or regulation, and prevented raising taxes to have the government step in, and neither party is willing to acknowledge the negative consequences of having home equity be the primary retirement fund for most people. There’s no way to make the current model work and the alternatives are blocked.

quickthrowman5• 1 year ago

But of course - I don't understand why people are forgetting that when companies raise prices/cut benefits, it is not because of actual losses but because they want to return more of their revenue to shareholders than to customers or employees.

When I raise my prices (construction services), it’s due to the annual wage increase for the union labor I use to perform the work. If I arbitrarily raise my price, I will lose a competitively bid project to a hungrier competitor.

I understand that not all industries are competitive, but that’s what regulations should be used for, regulating markets with a handful of players. Not all price increases are due to greed, the price of everything goes up over time due to inflation.

GenerWork• 1 year ago

Not surprising in the slightest. Let's hope the legislature delivers the recommendation that the office is asking for, hopefully this'll help slow the raise in insurance rates and get people off of Citizens.

speff3• 1 year ago

Regulators asked for that [better metrics] in 2023 but lawmakers rejected it, claiming it would “upset the apple cart” of Florida’s insurance industry.

I don't disagree with the lawmaker's stance on this one. FL's in a bad spot where home insurance in particular is unsustainable given the increasing threat from climate change. Why would I want to run an insurance operation in FL without an actual incentive (read: more money)? There ARE going to be multiple city-leveling hurricanes in the future - how do people expect to be able to pay for this?

dsr_3• 1 year ago

You raise the rates on everyone to cover actual expected losses, and make sure that the insurance companies don't commit fraud.

Then people will say that they can't afford Florida. And they will be correct.

speff3• 1 year ago

Agreed, but it seems like the people of FL want a populist who will prevent the companies from raising rates[0][1]. What happens then?

It's rhetorical, since we see in this post's article what happens. But my point is that something like this was more-or-less inevitable.

[1] https://www.flgov.com/eog/news/press/2025/governor-ron-desan...

[2] https://www.floridapeninsula.com/blog/florida-legislation-he...

Clubber7• 1 year ago

This is accurate at the macro level, but on the micro level the insurance companies are doing nasty insurance company stuff like doubling rates in ~5 years, requiring people to replace their roofs every 10 years instead of every 30 years (at their own expense) and low balling claims expecting most people to not hire a lawyer to fight for them when their house is in shambles. They've really gotten shady over the last few years. These aren't fly-by-night insurance companies, these are companies you've all heard of that make hundreds of billions of dollars a year, companies with blue logos and red logos; how American.

The other problem is, as most of you may know, to get a home loan to buy a house, you are required by the banks to carry insurance. This makes it a near monopoly that these companies are taking full advantage of. I'm sure the legislature is happy to take campaign contributions from these companies to ensure the status quo. No one will get arrested. You know the drill.

I agree insurance will be more expensive in a hurricane prone area, but all the shady stuff is what people are complaining about.

jghn4• 1 year ago

As a state, they consistently vote for politicians who are anti-regulation and pro-capitalism. What do they expect to happen here?

consumer4513• 1 year ago

FL's in a bad spot where home insurance in particular is unsustainable given the increasing threat from climate change.

I was a South FL resident for half of my life. Either the insurance pool is spread across the entire country, subsidizing FL, or just stop.

FL will soon be uninsurable in the free market.

bluedino2• 1 year ago

Isn't this what happened in areas of California?

jhawk282• 1 year ago

Only parts are uninsurable. If a house was built after 2005, it was done with updated hurricane codes. Most are built up higher, have hip roofs, and have their roofs strapped down to cinderblock walls with cement filled in the corners. All new roofs have a "sealed deck". The uninsurable are going to be on the coast (although you can mitigate this in a lot of cases) and low areas.

Side note: all insurance claims are subsidization.

amluto• 1 year ago

There ARE going to be multiple city-leveling hurricanes in the future - how do people expect to be able to pay for this?

Are there?

As far as I can tell, hurricanes:

- Destroy buildings that are not properly designed and built to withstand enough wind. The industry and modern codes know how to deal with this for new and sufficiently retrofitted construction. I don’t even think the measures needed are particularly expensive.

- Damage to structures due to wind-blown rain. The more informed architects and engineers know how to deal with this. A very brief search suggests that even the Miami-Dade code hasn’t caught up: for example, you can still build a vented roof assembly in Florida. This is a poor idea in a humid climate even without hurricane, and those vents are problematic in a hurricane. Getting rid of them in new or remodeled construction is easy and not very expensive, but architects and builders need to learn how.

- Damage to structures due to flying things near them. In a city setting, this can be mitigated by building structures that don’t turn into flying junk and enforcing requirements for people to keep their yards clean.

- Flooding: this will cause massive damage to whole cities.

An interesting property of the issues other than flooding is that the most vulnerable structures may get destroyed by hurricanes, leaving behind the less vulnerable structures.

dsr_3• 1 year ago

Sounds exactly like fraud.

wheelerwj• 1 year ago

Florida Insurers were running a Ponzi scheme, got it.

toomuchtodo2• 1 year ago

Still are.

https://news.ycombinator.com/item?id=42450680

https://news.ycombinator.com/item?id=41664750

whimsicalism3• 1 year ago

again, government at fault. it is beyond stupid that GSE mortgage backstops even exist in the first place

emorning33• 1 year ago

BUT BUT BUT Floridians voted for DeSantis, so its all good.

So now he's busy protecting insurers from being sued.

So nothing to see here. Just the government that you voted for collecting their bribes and protecting their friends.

Floridians are gonna get exactly what they deserve from the new administration.

jffry• 1 year ago

DeSantis received 4.61 million votes [1] from a population of 23.37 million [2]. 3.15 million voters voted for a candidate other than DeSantis [1]

[1] https://en.wikipedia.org/wiki/Electoral_history_of_Ron_DeSan...

[2] https://en.wikipedia.org/wiki/Florida

speff3• 1 year ago

14.5m eligible voters[0] - but your point still stands there. Though I'm of the opinion that non-voters implicitly voted for whoever won. So 11.35m hypothetical people voted for DeSantis in my mind.

[0] https://dos.fl.gov/elections/data-statistics/voter-registrat...

emorning33• 1 year ago

PS: Not voting is voting.

No real American has the right to sit on the sidelines anymore.

bilbo0s5• 1 year ago

And that's how democracy works. If you didn't vote? Well, your fault.

The beauty of the election is that it means right now in Florida you have exactly the government you want and deserve.

blacksqr• 1 year ago

The maxim of the law is "Silence gives consent." Those who did not vote voted for the winner.

s1mplicissimus• 1 year ago

The logical outcome of shareholder driven economy. Reminds me of a youtube quote: "Sell the houses to whom, Ben? Aquaman?"

wonderwonder2• 1 year ago

What's interesting is the entire thing is a game. I live in Florida. Had a roofer come by a couple years ago saying that a storm had come through a few months ago and there had been hail. So if he goes up on my roof and is able to find proof of hail damage I get a new roof for free. I needed a new roof at the time so while I generally look poorly on solicitation, I told him go ahead. A month later I had a brand new roof that cost me $1,000 out of pocket instead of $25,000.

These guys must have done 10 roofs within a few streets of my house.

So while the 250k is not a lot for an insurance company to eat, I am sure when that is multiplied by 1000's over the state, it gets expensive.

With that said, I also had a flood (10 inches of standing water) during a storm and my flood insurance company denied my claim because my sunken living room was considered a basement (2 steps down from the main floor). Turned into an indoor pool. So that was a nice $50k I had to spend out of pocket. I even paid separately for flood insurance as my hoi does not cover flooding. So total waste of money on that.

The entire thing is a circle of people scamming each other.

jbs789• 1 year ago

The roof stuff drives up prices massively. The MGA stuff is just the tool/response for the insurer to manage the downside for things like the roof nonsense - if they can pocket the fee when they write the deal then if there’s a subsequent rush of claims (some roofer, in some area, following some storm, which inflates claim costs), then the loss is capped at the equity they have in the insurance carrier.

bashmelek• 1 year ago

My thoughts exactly. I live in Florida, and have for 30 years. I’ve never personally used my insurance, and my parents had to use theirs once when the neighbor’s tree randomly fell in our yard, and they also had their insurance pay for most of their roof-a lot of people do. I paid for my own roof fully out of pocket.

If you are near water or below ground then there is a near certain risk of flood, and I realize I subsidize those areas while I chose to stay away from water. But the entire national conversation is focused on saying that climate change has doomed Florida

selimthegrim• 1 year ago

Well, this probably explains why those Koi pond entranceways fell out of fashion after the 80s

deepsquirrelnet• 1 year ago

Between tariffs (nails) and a huge number of undocumented workers in the roofing industry[1], it’s all setup to fall apart pretty soon.

[1] https://www.roofingcontractor.com/articles/100311-reporting-...

bluedino2• 1 year ago

Your insurance company blindly cut a check and didn't send an adjuster out to see how old your roof was and deny the claim or pro-rate it to only pay 10% of the cost?

wonderwonder2• 1 year ago

They sent a guy out. Hail damage was seen. A check was cut. The roof was indeed old though. There is some law that the roofers are able to take advantage of.

idermoth• 1 year ago

For those of us who live here, it's frustrating. Tons of scams and bullshit.

But we can name 10 recent transplants who built new, very large homes at water level in the past 5 years (ever wonder why they tell you hurricanes are getting more expensive??)

Then these same transplants scream bloody murder if the water gets close to their house. It has dominated political discussion in areas where, imho, these homes shouldn't even exist and other, less wealthy residents are lacking proper infrastructure maintenance.

Many of those transplants lost their shit after the recent hurricanes, even though anyone who is native knows it's always a possibility when you live 25 feet from the water at water level.

Then these same transplants want the cities to work impossible magic and "fix it." These same city officials, from my experience, are almost certainly in the pocket of big real estate investors.

Anyway, I get it. It sucks to flood out. But many of of these rich transplants clearly do not have the SLIGHTEST idea how the physics of water works. They're lucky it recedes so fast in my metro too.

game_the0ry• 1 year ago

Companies and their executives need to be held accountable of this will never stop.

No more bail outs and implement clawbacks.

emorning33• 1 year ago

What the insurers are doing is all legal, what do you propose exactly?

Do you think that the current administration is going to 'hold executives accountable'?

Trump could literally drive over to your house and shoot you in the head for even suggesting such a thing.

maxerickson2• 1 year ago

I wonder how those rates of return compare to say Georgia and Wyoming.

(A state you'd expect to have reasonably similar risk and one where you'd not necessarily expect it to be similar)

bilbo0s5• 1 year ago

Average elevation in Georgia: 600ft

Average elevation in Florida: 100ft

Georgia coastline: 100 mi non-NOAA

Florida coastline: 1350 mi non-NOAA

Even when cheating with non-NOAA numbers, Georgia is nowhere near comparable to Florida. Most of the people in your pools in Georgia are not on the coasts, and live at non-dangerous elevations. Whereas in Florida, nearly all of the people in your pools live on the coasts, and at extremely dangerous elevations.

dmoy• 1 year ago

For anyone else momentarily confused like me:

risk pools (which is evidently a term of art in insurance: https://en.m.wikipedia.org/wiki/Risk_pool)

Not swimming pools, which was my first read of above comment, at which point I thought, "well obviously I got something wrong there, time to look at Wikipedia"

maxerickson2• 1 year ago

Okay, pick whatever state, but the interesting thing is looking at the rate the industry is pulling out profits at. Are the Florida affiliates 10 times more profitable or 100? And so on.

whimsicalism3• 1 year ago

Sorry but a 4.5% profit cap in a state like Florida is ridiculously low. The problems with insurance are usually state-caused.

iask2• 1 year ago

I think the elephant in the room is fraudulent claims. Majority of the claims filed is related to over-priced contractors. Pick any city, pick any house - old, new, big, small, tiny - the average roof replacement is 4x-5x the cost!

I know of multiple cases where the adjusters send in claims that are 50% to 90% of the actual repair cost. This is the REAL problem. Not hurricanes. It’s the fucking fraud.

I think the only option to combat this is to give home owners the right to fix things like roof themselves…why do I need a city permit, why do I need a fraudulent contractor permitted ONLY by the city (I don’t want the city looking out for me…that’s always their BS argument…leave that to me). I should be able to shop the supplies myself.

Here’s another exercise - pick any city in FL - try to buy roofing materials yourself.

The point is - Fraud is the biggest problem with homeowners insurance in the state of FL.

quickthrowman5• 1 year ago

why do I need a city permit, why do I need a fraudulent contractor permitted ONLY by the city (I don’t want the city looking out for me…that’s always their BS argument…leave that to me). I should be able to shop the supplies myself.

You are not the only person that will own the house you live in, that’s essentially what permits and regulations are for, to ensure the next owner isn’t saddled with a stupid decision made by the previous homeowner. Roof inspections are particularly important in places with snow load or hurricane force winds.

Roof claims are prorated, if your previous roof was rated for 30 years and installed 15 years ago, you get half of the replacement cost paid.

If you don’t like it you can pay off your house and self-insure your residence. If you don’t like cities, go buy land and build a house in an unincorporated area, there are places that completely lack any local building code enforcement.

iask2• 1 year ago

That’s what home inspectors are for at the time of purchase. And even if I choose to replace the roof myself - the city is free to inspect according to their ordinances. What I disagree with is that you MUST use their approved contractors.

And the prorated nonsense is simply mathematical fraud.

jfengel• 1 year ago

That seems impossible. I have been assured that only government pays fraudulent claims. The invisible hand ensures that corporations will root out fraud.

loeg2• 1 year ago

Florida significantly reformed insurance/claims in 2023 to reduce fraud. Senate bill 2A prevents assigning insurance claim benefits to 3rd parties, which was a significant source of insurance fraud.

mlinhares3• 1 year ago

The elephant in the room is that hurricane insurance shouldn’t be a for profit business because no business can survive multiple cities being destroyed by a hurricane, this money should have been driven to a state fund that pays out when disaster strikes and the private insurance business should insure only the usual stuff.

jghn4• 1 year ago

It's not an elephant in the room. The fact that half of the populace is too brainwashed and/or stupid to understand truths like this is the elephant in the room.

whimsicalism3• 1 year ago

democracies generally will not be able to insure at a sufficient level. i'm opposed to having the government force me to subsidize others poor choice of environ. if someone wants to live in a fire-prone or hurricane-prone area, that is their choice and they should be exposed to the true cost of insuring themselves and hopefully this will cause people to move somewhere safer instead or make changes (like a sturdier home, clearing brush, etc.) that reduce their rates.

11235813213• 1 year ago

Public home insurance with unlimited risk appetite would create a hazard as too many people would move and build carelessly. For public health and financial reasons, the state of Florida shouldn’t encourage this.

Reinsurance already covers excess claims before an insurer exits the market. There is no systemic risk from an insurance confidence crisis as there was in banking pre-FDIC.

Any suggestion to compensate with additional burden on homeowners (“just charge them more”, “require stricter building codes”) can be handled by existing insurance regulation.

JumpCrisscross• 1 year ago

no business can survive multiple cities being destroyed by a hurricane

Then stop letting multiple cities be destroyed by a hurricane. We know how to engineer hurricane defences and build hurricane-proof structures [1].

[1] https://en.wikipedia.org/wiki/Hurricane-proof_building

cudgy2• 1 year ago

Are you saying that the insurance companies are paying 4 to 5 times cost to repair roof, but then at the same time saying that adjusters are only paying out 50 to 90% of the actual cost?

That doesn’t make sense. The former which you were claiming is fraud seems unlikely to be approved by an insurance company. The cost to replace roofs is well known. Why would they pay 4 to 5 times the amount? The latter point regarding adjusters only paying 50-90% of the actual cost sounds more like the real insurance companies that I’ve ever dealt with.

Furthermore, building permits and requiring licensed contractors to repair the roof and replace the roof are not only to protect you, but to protect any poor person that comes to buy your home from having to deal with shoddy repairs from well-meaning homeowners.

cm2187• 1 year ago

Not sure I agree with the article.

1) Making a loss doesn't prevent you from paying a dividend. Dividends aren't paid from the current year's profit, but from retained earnings, i.e. from accumulated profits since the creation of the company. It is frequent for companies to maintain their dividend policy through cycles.

2) The insurer doesn't have to make a loss overall to make a claim that the rates charged on some specific part of their portfolio do not cover expected losses on that portfolio, since circumstances have changed. In theory insurance rates must be sufficient to cover expected losses, and I am pretty sure financial regulations require insurers to do so (prudential rules/solvency, though I do not work for an insurance company so not an expert).

So it is one thing to call the insurers claims bullshit, and maybe it is. But 1) they paid a dividend or 2) the company did not make a loss for the year, aren't valid arguments.

loeg2• 1 year ago

Worth understanding this whole argument applies only to local Florida-only insurers; the big national entities don't operate like this and also found Florida too expensive to operate in prior to the 2023 tort/insurance reforms.

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.)

cptskippy2• 1 year ago

This practice is pretty common in auto insurance. The company you wrote your policy with is usually broker and your ID car will list the actual Insurance Company. If you go through an independent agent you'll encounter 3 layers of abstraction where the agent writes business for multiple brokers who manage books of business for different insurance companies.

serjester• 1 year ago

For some background, Florida is an incredibly challenging insurance market. In 2020, the state accounted for 85% of insurance litigation despite making up only about 10% of total premiums in the US. That combined with sky rocketing reinsurance costs, has driven tons of reputable carriers out of the state. They dodged a bullet with Milton - many of the remaining carriers are one big hurricane away from insolvency.

cptskippy2• 1 year ago

~20 years ago when I worked for an auto insurance broker, we opened a program in Florida and it was very challenging. I'm trying to remember the specifics but the regulations were such that you couldn't collect more than like 15 days of premium in the down payment and you were required to cover that policy for the first 30 days. So there was always something like a 15 day gap. This meant policies were cancelling after the first month and rewriting. They didn't have electronic approvals at this time so you couldn't implement any sort of real-time checks either. If your producer wrote a policy, you were on the hook for it. I think we introduced some by-fax validation process to mitigate this.

Another common practice for people who need insurance to register vehicle but had no intention of carrying insurance was to write bad checks. If the person was approved they'd basically have 30 days of coverage for free. If they had an accident they could pay the premium, if they didn't then they could let the policy lapse.

There was also something weird about the uninsured and underinsured coverage, I can't remember specifics but I think it was that the coverage was required due to the high number of people who drove uninsured but we couldn't charge for it? I can't recall exactly.

The regulations were such that it made it very hard to make money and I think we backed out of the market after 12-18 months.

howard941• 1 year ago

Uninsured/underinsured is not required in Florida. It's good to have because it's the only coverage that actually benefits the insured - but it's not required. And it's not cheap.

blackeyeblitzar• 1 year ago

I am surprised most of this discussion doesn’t touch on the affiliates issue, and it makes me think people aren’t reading the article. The summary is that many of these insurance companies are creating shell companies that provide services to the main insurance company, and charge a lot for those things. So the profit of the insurance company remains low and meets regulations, while all of the ‘real’ profit is hidden in these affiliated companies.

Maybe that is technically legal but it certainly does not seem to be what the law intended. It also seems suspicious that this report was not disclosed to the public, and that it took so long to respond to information requests. And it also seems odd that neither the insurance commissioner nor Governor De Santis have acknowledged these issues.

cudgy2• 1 year ago

The actual report with the findings had the following interesting statement at the bottom of page 3. Seems convenient to claim fraud as a trade secret, which apparently prevents this report from exposing those companies.

“A number of the documents utilized were filed with the Office by an insurer as a “Trade Secret”. As such, information regarding any of the individual companies discussed in the Appendixes to this report may not be released without approval of the Director.”

https://www.documentcloud.org/documents/25540452-affiliated-...

Florida insurers steered money to investors while claiming losses, study says

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