Florida House to investigate whether property insurers hid profits with ‘accounting tricks’

Florida House Speaker Daniel Perez announced Tuesday that he was ordering a committee to hold hearings into property insurance companies moving billions of dollars to affiliate companies while claiming losses, following reporting by the Herald/Times.

In his opening remarks for the legislative session, which began Tuesday, the Miami Republican said that insurance companies might have been using “creative accounting” to “hide” profits.

“A couple of years ago, the insurance industry came to the Legislature and said without sweeping reforms, companies could not compete in Florida,” Perez told lawmakers.

“We have since learned of reports — in existence at that time but not disclosed to the Legislature — that may suggest some insurance companies were using accounting tricks to hide substantial profits while telling us they were in a crisis.”

The Herald/Times last month revealed that a never-before-seen state report found that insurance companies claimed to lose millions at the start of the state’s insurance crisis, while their affiliate companies made billions.

The report was produced in March 2022, months before lawmakers met in emergency sessions of the Legislature to make it harder to sue insurance companies.

Insurers, regulators and Gov. Ron DeSantis cited the high number of lawsuits against companies as the reason why Floridians were experiencing skyrocketing premiums.

Perez said the committee would be given the “full range of tools” to investigate: “issuing subpoenas, putting witnesses under oath, and hiring outside experts.” Those tools are rarely used by legislative committees.

The remarks received a standing ovation by lawmakers.

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When asked about Perez’s comments, DeSantis said that state regulators have since increased oversight of insurers’ affiliates, although he was open to doing more.

“If there’s things that need to be done to be able to make sure that we have transparency and appropriate oversight, I’m all for that,” said DeSantis, who oversees the Office of Insurance Regulation.

But he said he still supported the changes that made it harder to sue insurance companies, and he would not support any legislation undoing it.

“That was something that needed to be done,” he said.

Senate President Ben Albritton, R-Wauchula, said senators were going to be “watching closely” for what the House’s hearings yield.

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Last week, House Minority Leader Fentrice Driskell, D-Tampa, asked Perez to order an investigation. She praised Perez’s decision on Tuesday and said there could be “meaningful legislation” over the next 60 days.

“We can see that this Legislature can act quickly when it needs to,” Driskell said.

The American Property Casualty Insurance Association, a trade group representing insurance companies, said in a statement that it would work with lawmakers.

The association “looks forward to working with the Legislature during the 2025 Legislative Session and ensuring policy proposals are based on facts and not sensationalized reporting,” its vice president of state government relations, Logan McFaddin, said in a statement.

The report was first requested by the Herald/Times in 2022 and received in December last year.

It was commissioned, at a cost of about $150,000, by the Office of Insurance Regulation to examine insurers’ use of affiliate companies between 2017 and 2019.

The office caps the profits of insurers at about 4.5%. To get around it, many companies set up webs of affiliate companies that charge the insurance company for services at rates that can be well above what the services cost.

Once the money leaves the insurer, it’s no longer under the oversight of regulators — and not available to pay claims.

The report showed that the insurers in the study (minus a couple of outliers) showed a net loss of $432 million during those three years. Their affiliate companies showed a net income of $1.8 billion.

Insurers also spent $680 million on dividends to shareholders during the period.

The author of the report concluded that 19 of 30 companies it examined had relationships with affiliates that were “not fair and reasonable” under state regulations, which are not defined.

The Office of Insurance Regulation said the report was incomplete, but showed that reforms to affiliate companies it has made were justified.

The office this year is asking lawmakers to allow it to get more information on affiliate companies, including the “actual cost” of the services it charges insurers.

Perez told reporters that the House had already filed a request for records with the Office of Insurance Regulation relating to the report.

“I believe in [the office],” Perez said. “They want to do what’s right, and they want to do what’s right for the consumer.”

The House Insurance and Banking Subcommittee, led by Rep. Brad Yeager, R-New Port Richey, will be conducting the hearings. Yeager said he didn’t know yet what the hearings would entail.

“We want to peel the onion back and see what’s there,” Yeager said. “We’ll do whatever we need to do to find the information out.”

Herald/Times staff writer Romy Ellenbogen contributed to this report.

This story was originally published March 4, 2025 at 11:27 AM.