Florida intensifies oversight of insurers after they cut disaster estimates
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Florida Gov. Ron DeSantis signed a law Wednesday that aims to hold property insurance companies more accountable for claims-handling practices by requiring more transparency with their processes, increasing fines for violating laws, and giving the state's regulatory bodies additional powers to investigate allegations of bad behavior in a market that has been teetering toward collapse for years.
The Insurer Accountability Act, a rare bipartisan effort introduced by Republicans, stands in stark contrast to a recent number of pro-insurer restructurings over the past year, including making it harder for homeowners to take legal action against their carriers. Annual premiums have also dramatically increased statewide.
State Sen. Travis Hutson (R), who sponsored the bill DeSantis (R) signed Wednesday, said lawmakers wanted to bring more "balance" and oversight to Florida's insurance industry, which has traditionally wielded political power in Tallahassee. Watchdog organizations and critics said the industry's lobbyists and political donations have strongly influenced past legislation and lax oversight by state regulators.
Aspects of the new law, such as preventing carriers from altering policyholders' estimates without detailing the changes, were influenced by a Washington Post investigation, according to Hutson.
The legislation was introduced after the investigation detailed how carriers were drastically altering Hurricane Ian claims by erasing and lowering damage estimates without the adjuster's knowledge or permission.
The law, which takes effect July 1, includes new and strengthened requirements for more transparent claims-handling practices, specifically prohibiting companies from altering adjusters' reports without detailing why they lowered policyholders' estimates and who made those changes. Carriers now have to keep a list of edits or retain all versions of the report for regulatory purposes. To ensure they are complying with the state's insurance code, insurers must also submit their claims handling instructions to Florida regulators. Financially flailing or insolvent companies can't solicit or accept new policies, and executives, officers and directors of these failing companies can no longer get bonuses, according to the law.
"We want more transparency, oversight and accountability of bad actors," Hutson said. "If carriers are purposefully hurting the insured, we want to know about it."
The new law requires the state's regulatory bodies, the Office of Insurance Regulation and Department of Financial Services, which have long been accused of not holding insurers accountable, to produce annual and quarterly reports to show they have enforced laws and regulations. It also gives the bodies resources to hire staff to better regulate the industry and to fine insurers more for violating laws.
In response to The Post's investigation, the Department of Financial Services has said it is investigating allegations and "interviewed witnesses and collected thousands of documents of evidence." Their probe is still open and ongoing.
The Insurance Information Institute, a research and communications nonprofit for the industry, said in a statement that the law was a response to constituent feedback about previous bills being "too insurer-focused." The bill signed Wednesday is "consumer-focused and provides stricter oversight of the insurance industry by the state regulator, modeled after best practices we see in many other states."
The version of the bill that became law lost some significant provisions in the legislative process, including requiring insurance companies to report their financial health and the amount of money and dividends paid to their parent companies and subsidiaries - something not required in Florida. Consumer advocates have also said that the law does not go far enough to crack down on insurance companies and does not mandate the level of state enforcement they believe is needed.
State Rep. Hillary Cassel, a Democrat on the Hurricane Resiliency & Recovery subcommittee and attorney who has represented families against insurance companies, said that everything in the new law is still "a may, not a must."
"Nothing in this law says they must impose fines, they must do additional audits, they must have transparency with insurance companies' financials," Cassel said. "The goal is to protect consumers and we will never reach that goal if the people in charge of insurance regulation is bought and paid for by the insurance company and are able to turn a blind eye and not look at the real problem."
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