A study shows Florida home insurers shifted billions off their books. While Florida legislators launch an investigation of Florida-domiciled insurers that moved billions of dollars off their books between 2017 and 2019, Weiss Ratings has completed a landmark study showing the practice has accelerated in recent years.
In 2023, the last year for which complete data is available, Florida-domiciled insurers that wrote homeowners policies transferred $1.8 billion to affiliates for expenses plus another $335 million to investors via dividends, or a total of $2.1 billion that was unavailable to pay claims. Florida’s state-run Citizens Insurance, which does not report fees to affiliates or pay dividends, is not included in this study.
“If they’re moving billions, it makes you wonder how they can do right for policyholders” said Dr. Martin D. Weiss, founder of Weiss Ratings. “So, it should come as no surprise that the data we’re revealing today dovetails with our report that Florida insurers closed nearly half of hurricane and other damage claims with no payment whatsoever to policyholders, also in 2023.”
There’s nothing fundamentally wrong with doing business with affiliates or paying dividends to investors, even if the vast majority are out of state. However, Florida-domiciled insurers have pursued both avenues far beyond the national average, according to the study on Florida home insurers.
In 2023, Florida-domiciled companies paid 20.4% of their expenses to affiliates, a rate that’s the highest since 2014 and four times higher than companies outside of Florida.
Florida-domiciled companies have also broken from the national norm with their dividend payments to investors. While almost all companies in other states pay dividends out of profits, many Florida companies have continually paid large dividends despite losses.
In 2021, Florida-domiciled companies reported an aggregate loss of $522 million, but paid dividends of $295 million. In 2022, they lost $778 million, while still paying out $213 million in dividends despite the flood of red ink. And in 2023, with a meager profit of $160 million, they paid out $335 million in dividends, or more than double their profits.
“This pattern of behavior is unfortunate for homeowners,” Weiss concluded. “Strangely, companies often question the source of our information, but it’s from their own official statements they file with the states and the National Association of Insurance Commissioners. It’s damning data, and I trust it will be thoroughly investigated by the legislature.”
View the report on Florida home insurers online.
