A long-hidden state report examining Florida property insurers has revealed that 53 companies claimed $432 million in losses from 2017 to 2019 while simultaneously paying fees to sibling companies that generated $1.3 billion in net income, according to the Orlando Sentinel and South Florida Sun Sentinel's review of the 2022 "Affiliated Fee Analysis" performed by Risk & Regulatory Consulting, LLC for the state Office of Insurance Regulation. The news organizations published the complete report after the Florida Senate demanded its destruction, claiming it contained trade secrets. The analysis explored payments and practices that might hide insurers' real financial health, undermining regulators' work while driving up premiums for policyholders.
At least 17 companies in the analysis, either individually or as part of an insurance group, publicly reported operating losses while also paying their affiliated companies more than they claimed to have lost, the news organizations counted. Security First Insurance reported roughly $27 million in losses while affiliates receiving 30% of the insurer's gross written premiums earned over $50 million in net income, the report says. PURE Insurance claimed $9 million in losses while paying 22% of gross premiums to affiliates that earned $176 million. Homeowners Choice Property & Casualty Insurance Co. reported $28.7 million in net profit for its insurance operation but $85 million in net income for its affiliates, which received 28.5% of the insurer's gross written premium. The consultant deemed 20 insurers to be paying affiliates at a rate presumed not fair and reasonable, based on comparing the company's net income with that of its affiliates.
According to the report, the consultant examined records for the 53 companies from 2017 to 2019, a critical period for property insurers that came before a multi-year market collapse caused by hurricanes Irma and Michael. Jan Moenck, one of the individuals who worked on the consulting firm's report, told state lawmakers the consulting firm was engaged on Oct. 14, 2021 to analyze all the remaining Florida insurers, and the expanded report was provided to state officials in April 2022. Florida Insurance Commissioner Michael Yaworsky told a House committee in 2025 the analysis was never released because it was an unfinished draft, and his office has branded the report as "incredibly flawed and outdated" and something that "should never be relied upon as accurate." Consumer advocates accused Gov. Ron DeSantis' administration of deliberately burying the consultant's analysis four years ago as lawmakers approved sweeping legal and financial reforms that benefited the insurance industry.
The use of affiliates—sibling companies sharing ownership with the primary insurer that perform services like underwriting, claims handling, accounting and technology—is legal and has long been standard practice in the insurance business. But Florida law requires payments between insurers and affiliates to be "fair and reasonable," even though no state statute clearly defines what that is, which has been the source of much scrutiny from industry watchdogs who say the use of affiliates can hurt consumers if the companies reap inflated fees that deplete the primary insurer's ability to pay claims. Florida, like other states, controls the rates insurers may charge their customers, and regulators typically use a profitability benchmark of about 4.5% for the primary insurer—but they don't directly limit or cap the profits of the insurers' affiliates, which consumer advocates say can create an incentive for companies to make higher returns with that part of their business. A Sentinel/Sun Sentinel review indicates that payments to affiliates by key Florida insurers in 2025 fell in a range from 20% to 35% of direct premium, about the same range the consultant found from 2017 to 2019.
In the wake of hearings sparked by the report's initial revelation, the Florida House voted 106-3 earlier this year for legislation to give regulators more authority to scrutinize insurers' affiliate transactions, but the measure died in the Senate. The House would have required insurers to submit more information to regulators detailing affiliate payments and would have set standards for evaluating whether they're fair and reasonable, including the relative financial condition of the insurer and the affiliate, the amount and purpose of dividends and whether affiliate agreements are in the best interest of policyholders. House members also promised last year to undertake their own updated "forensic audit" of affiliate payments, a project that appears to have been abandoned.