Florida House committee moves to police profit-shifting by property insurers
A Florida House committee advanced a bill Wednesday that would place limits on property insurance companies using affiliates to shift profits, following up on reporting by the Herald/Times last year.
HB 1399 would require insurance companies to report more information to state regulators about their agreements with affiliate companies and ensure those relationships are “fair and reasonable” for policyholders.
State regulators cap the profits of insurance companies and approve their rate requests. But they have limited authority over insurers’ sister or parent companies.
Many insurance executives have created webs of companies that bill the insurance company for basic services, such as handling claims or providing reinsurance. Those affiliates may charge the company rates far higher than what a typical third-party company would charge for those services.
Florida insurers’ use of affiliates — also known as “managing general agents” — has been known for decades. Executives’ moves to shuffle money to those companies have been cited as a contributor to numerous insurance company failures over the years.
But the scope of the issue wasn’t known until last year, when the Herald/Times uncovered a study commissioned by state regulators but never released to the public that examined the profitability of insurance companies and their affiliates.
The 2022 report found that insurance companies in the study lost $432 million between 2017 and 2019 — losses that they claimed justified steep rate increases on Florida homeowners.
Meanwhile, the study found that their affiliate companies saw a net income of $1.8 billion. Executives also distributed $680 million in dividends to shareholders during the period.
The author of the study concluded that most of the relationships between insurers and their affiliates were not “fair and reasonable” under state law. The term is not defined in statute.
The study was never given to lawmakers, whose primary response to Florida’s insurance crisis in recent years was to pass laws making it harder to sue insurance companies.
In response to the Herald/Times’ report, Florida House Speaker Daniel Perez, R-Miami, ordered hearings during last year’s legislative session into insurers’ “creative accounting.” The House Insurance and Banking Subcommittee heard testimony from regulators and the report’s author but ultimately took no action.
The bill sponsored this year by Rep. Kim Berfield, R-Clearwater, would clarify how to determine “fair and reasonable” by requiring insurers to report more information to the state, such as the “actual cost” of the services provided by an affiliate company and how much in dividends the company awarded to shareholders.
Contracts between insurers and their affiliates would automatically expire after three years, and dividends to shareholders would have to be approved by the Office of Insurance Regulation. Any payments to affiliates the office deems improper would have to be refunded to the insurance company under the bill.
The bill passed unanimously Wednesday, but not before Rep. Toby Overdorf, R-Palm City, said he was concerned the requirements would cost insurance companies money that would be passed on to consumers.
“My concern is that we’re growing government,” Overdorf said.
Rep. Hillary Cassel, R-Dania Beach, said placing restrictions on affiliate companies is what will really save homeowners money.
“Those savings are going to get passed on, because right now, they’re getting to charge excess rates with no oversight,” Cassel said.
Berfield said she’s met with insurance company representatives and others about the bill. But as of Wednesday, the legislation has no cosponsor in the Senate, making its path to becoming law more difficult.
This story was originally published January 21, 2026 at 4:45 PM with the headline "Florida House committee moves to police profit-shifting by property insurers."