Florida has a property insurance problem. Rates are already high and headed higher. The issue is so pressing that the governor has called lawmakers back to Tallahassee for a special session that starts Monday. There is no single solution to this complex challenge, but one vein to mine: Dig deep into why so many insurance companies have failed in Florida recently. “Well, duh,” you might say. “That’s too obvious.” Maybe so, but unfortunately on this important question, Florida hasn’t moved past “duh.”
The last hurricane hit Florida in 2018. Since then, seven property insurers have gone belly up, four of them in the last 13 months. A few others are on shaky financial footing. As required by law, the Department of Financial Services writes a report on each insurance company that fails. But as the Times’ Lawrence Mower reported this week, the department often doesn’t release those financial autopsies until years after the company went under. The Times asked for reports on five of the insurers that had failed since 2014. The department had finished only one. The framers crafted the U.S. Constitution in 116 days. Stephen King wrote “The Shining” in less than six weeks. Can the state not release a report about an insolvent insurance company in less than a year?
Worse yet, few people know about the reports — people who should know. Multiple insurance trade groups including the Federal Association for Insurance Reform told the Times they didn’t know the reports existed. Only two state lawmakers — Sen. Jeff Brandes, R-St. Petersburg, and Rep. Evan Jenne, D-Dania Beach — request or were sent the reports, a spokesperson for the Department of Financial Services said.
Florida Insurance Consumer Advocate Tasha Carter said last year that she wasn’t aware of the reports, and her spokesperson did not answer questions last week about whether that had changed. That’s right. The state’s insurance consumer advocate — whose website says the office is “committed to finding solutions to insurance issues facing Floridians” — hadn’t as of last year read any of the reports which could provide clues on how to carry out that mission. We’d like to think that this is just a lack of awareness, and not indifference or negligence.
This isn’t about pushing paper; the reports provide valuable insights on how to close loopholes and where the state needs to better enforce existing laws. For instance, the report on Jacksonville-based Sunshine State Insurance Company’s failure showed how the CEO received a $200,000 bonus months before the company was liquidated. Sunshine State’s parent and sister companies also took millions of dollars out of the company through written and “verbal” agreements, including $708,830 in two separate oral agreements in the 10 months before the company liquidated, the report said. Florida law requires such agreements to be in writing and pre-approved by the Office of Financial Regulation. One wonders what valuable nuggets about other failed companies are in the reports that haven’t been released.
With a deeper understanding of why insurance companies fail, lawmakers could enact better policies and insurers could avoid the pitfalls that ruined their competitors. As it stands, the failures take a bite out of our pocketbooks. Orlando-based St. Johns Insurance Company went under this year, which forced the Florida Insurance Guaranty Association to pay off the company’s outstanding claims. The 1.3 percent fee hits every policy sold in Florida, from homeowners’ insurance to flood and malpractice policies, the Times reported. That’s just the cost of one company going under.
The Department of Financial Services said it would begin posting the reports online before the special legislative session on Monday. That’s a good start. But how about promoting them, too? The state sends out news releases encouraging Elon Musk to move Twitter’s headquarters to Florida and for the latest appointment to the board of optometry. How about doing the same for the insolvency reports? At a minimum, send them to every insurance company and trade association in the state. Of course, more of the reports need to be completed in a timely fashion. It would also help if more lawmakers and state leaders actually read them. Sen. Brandes has pushed for requiring the board of directors of failed insurance companies to hold public hearings about what went wrong and how other companies can avoid a similar fate. After all, their failure costs us money. And should they profit from their own mistakes?
There is a lot more to the property insurance crisis than reports on failed companies — rampant litigation, reinsurance costs and building requirements top many lists. But writing and distributing these reports is low hanging fruit, low cost and easy to do. On this important issue, let’s at least get beyond “duh.”
Editorials are the institutional voice of the Tampa Bay Times. The members of the Editorial Board are Editor of Editorials Graham Brink, Sherri Day, Sebastian Dortch, John Hill, Jim Verhulst and Chairman Paul Tash. Follow @TBTimes_Opinion on Twitter for more opinion news.