Paige St. John wrote a Pulitzer winning series on the corruption of Florida’s insurance industry and propaganda by the insurance company trade associations nearly nine years ago. I was thinking about this and one particular article, How Florida Insurers Make Millions On The Side, when the Security First CEO blamed the furious and upset policyholders for hiring attorneys to help them get their claims paid. I suppose the Security First claims department was counting on policyholders just giving up?
I was thinking of Julie and Gary Wagner from Lynn Haven, Florida who are insured with Security First. They had their father, a retired Coast Guardsman who reached out to my retired Coast Guard father to ask if he could get me to help them with their delayed and underpaid insurance claim. The above photo shows the trailer they live in next to their gutted out home insured by Security First.
I bet the CEO of Security First, their lobbyists, the insurance trade association lobbyists are not living in gutted out trailers next to their mansions. Looking for scapegoats to blame for a problem that hurricane damaged policyholders know was caused by the insurance companies has even more infuriated the public towards Florida’s insurance industry and its propagandists. Rightfully so.
So, when the Security First CEO started threatening higher rates and bellyaching about an insurance industry that is not making enough money, I remembered what Paige St. John uncovered about these affluent insurance company owners and how they take money out of the companies:
Today, nearly half of Florida’s home insurance is provided by companies whose primary profit comes not from insuring homes but from diverting premiums into a host of side ventures.
Investors and executives in 2008 moved $1.9 billion in policyholder money out of heavily regulated insurers, where profits are capped and dividends are restricted, to separate companies that are owned by the same people, housed at the same address and sometimes use the same employees.
As soon as the money is moved, it is beyond the reach of homeowners who might need it to rebuild after a disaster.
It is also free to be paid to investors and owners as profit without interference from regulators.
Meanwhile, insurance executives complained about losses and state-mandated discounts, and pressured state regulators for permission to charge homeowners more — even to end rate regulation altogether.
The payments to themselves, by and large, were legal.
Oh, how the song remains the same!
The Florida Office of Insurance Regulation, the Department of Financial Services, The Florida Insurance Consumer Advocate, and all those investigating Florida’s insurance industry should take a deep dive into the finances of Florida’s insurance companies and see how “expenses” are really being spent and where that money goes.
The question that is begging to be answered is why we allow these activities and financial slights of hand to be legal? The legislature should not only come up with a package of pro-consumer claims legislation, the insurance industry in Florida needs reform so that the profits are not diverted, and true surplus is raised into the treasuries of the insurance companies protecting policyholders.
Thought For The Day
There is not a crime, there is not a dodge, there is not a trick, there is not a swindle, there is not a vice which does not live by secrecy.
― Joseph Pulitzer