A secret consultant report that Florida regulators tried to keep hidden reveals that property insurers claimed $432 million in losses while paying fees to affiliated companies that generated $1.3 billion in net income from 2017 to 2019, according to documents obtained by the Orlando Sentinel and South Florida Sun Sentinel this summer. The analysis, commissioned by the state's Office of Insurance Regulation in 2020 and 2021, concluded that 20 property insurers were paying their affiliated companies fees that exceeded Florida's legal standard of "fair and reasonable." Now the Florida Senate is threatening the news organizations with "civil or criminal legal implications" if they refuse to immediately destroy the evidence.
The report identified major insurers whose public losses masked substantial affiliate profits. Heritage Property & Casualty Insurance Co. reported nearly $81 million in losses from 2017 to 2019, while its affiliates generated $174 million in net income. American Platinum Property and Casualty and its sibling Universal Property & Casualty claimed a combined loss of $11.1 million during the same period while an affiliate earned about $166 million. FedNat Insurance and a subsidiary reported a $42 million loss while affiliates made at least $79.4 million—the core insurance company was declared insolvent in 2022. The consultant examined 53 property insurers with prominent positions in Florida's market and found that insurers' affiliated managing general agents charged between 20% and 34% of premiums, with total affiliated fees reaching as high as 63%.
The consultant, Connecticut-based Risk & Regulatory Consulting, LLC, determined that 19 of the 35 state and regional insurers it examined paid affiliate fees that presumptively weren't fair and reasonable, though only one of 18 national insurers failed the test. The report flagged three insurers that collapsed entirely—Gulfstream Property and Casualty Insurance Co., Avatar Property & Casualty Insurance Co., and FedNat Insurance Co.—all of which failed the consultant's standards. State Insurance Commissioner Michael Yaworsky has branded the consultant's work as flawed and outdated, containing "a great deal of errors, inconsistencies, data validation issues and antiquated information," though his office declined to detail the alleged inaccuracies, claiming it would require disclosure of protected data.
The practice of using affiliated companies to perform services like claims processing is legal under Florida law, but consumer advocates have worried that the affiliate structure can allow insurers to hide income as they seek state approval of rate increases. The consultant's study found that few state and regional insurers employ a fee-for-service approach, instead often paying affiliates a set percentage of premiums collected from policyholders. The consultant compared insurers' public net income to their affiliates' net income, which typically isn't disclosed and which at least some insurers assert is a trade secret. Florida legislators debated sweeping reforms in 2022 to rescue the state's property insurance industry while regulators sat on this report, and lawmakers later said the findings had been hidden from them as they approved financial and legal reforms that benefited the insurance industry in 2022-23.
The Florida House passed bills earlier this year increasing oversight of affiliate payments and boosting consumer transparency of insurer finances, but those measures died in the Senate. Since the state's tort reform made it harder for policyholders to file lawsuits challenging claim denial and underpayments, 21 additional property insurers have entered Florida's market, and rate filings for 2024 showed a downward trend for the first time in years, which has continued into 2026. But questions about the industry's financial accounting persist. The Senate's general counsel demanded the news organizations destroy the records, writing they were inadvertently released and contain "sensitive, proprietary trade secrets," though First Amendment advocates called the demand a dramatic overreach and said the press has full rights to use knowledge in reporting on matters of public interest.