Unveiling the Deceptive Practices of Florida’s Insurance Market: Why You Should Always Call Us First

When disaster strikes, the last thing you need is to worry about whether your insurance company will fulfill its obligations. Unfortunately, a recent unpublished study of Florida’s insurance industry reveals a disturbing pattern of fraudulent practices that prioritize profit over policyholders. These manipulative tactics leave homeowners vulnerable when they need help the most.

A recent report obtained by the Miami Herald and commissioned by the Florida Office of Insurance Regulation uncovered a disturbing truth: while Florida insurers were claiming massive losses after hurricanes Irma and Michael, their parent companies and affiliates were reaping billions in profits. Between 2017 and 2019, Florida’s insurers reported a collective net loss of $432 million, but their affiliate companies reported a staggering $14 billion in net income. This disparity raises the alarm about the deceptive practices happening behind closed doors.

The Money Trail: Inflated Fees and Dividends to Shareholders

While executives were crying poverty to justify rate hikes, they were simultaneously diverting funds to affiliated companies in the form of inflated fees. These affiliates, which manage services like claims handling, underwriting, and accounting, were charging the insurers high fees that ranged from 20% to 34% of premiums, significantly boosting the profits of the parent companies.

What’s worse, in some cases, the insurers even waived $208 million in fees owed to affiliates to make their financial statements appear more stable. Meanwhile, millions of dollars were funneled out of the companies in the form of dividends to shareholders. Between 2017 and 2019, the insurers under study paid out $680 million in dividends despite claiming financial strain. These tactics left the insurers with weakened financial positions, putting policyholders at risk.

A System Designed for Profit, Not Protection

The report reveals that Florida’s insurers often set up complex networks of affiliated companies, known as managing general agents (MGAs), that provide essential services. These arrangements allow insurers to circumvent regulations that cap profits from insurance premiums. By creating affiliates, insurance executives can pay themselves and their investors handsomely, while policyholders bear the brunt of inflated premiums and inadequate claims payouts.

Such practices are not only exploitative but illegal in some cases, violating the state’s own regulations on “fair and reasonable” affiliate agreements. Yet, these transactions have gone largely unchecked, leaving regulators scrambling to catch up with the true scope of the problem. The study, which was kept from lawmakers for years, has only now begun to shed light on the financial maneuvers that fuel the crisis in Florida’s insurance market.

Connecting the Dots: Lack of Cooperation and Data Transparency

This latest study is not an isolated example of malpractice in the Florida insurance market. For years, insurers have been resistant to providing regulators with full transparency regarding their operations, making it almost impossible for the state to enforce meaningful reforms. In fact, the lack of cooperation from insurers was a key issue highlighted in previous stories, where fines were levied against companies that failed to produce critical data needed for proper oversight.

Without the necessary data, regulators cannot fully assess whether insurance practices are fair or if insurers are taking advantage of policyholders. This systemic refusal to cooperate with regulatory bodies continues to enable bad actors in the industry to inflate fees and mislead consumers.

The absence of complete data makes it nearly impossible to detect where insurers are abusing their power to enrich themselves, especially in relation to affiliate fees, which are often hidden in complex financial arrangements. Even when regulators request the data, insurers frequently provide incomplete or misleading information, which weakens the effectiveness of oversight and allows bad practices to continue unchecked.

How Insurers Have Manipulated the Legislature: A Pattern of False Narratives

The true cause of Florida’s escalating insurance premiums is not what insurers claim. Despite the narrative that lawsuits are the driving force behind premium increases, evidence linking litigation to the crisis is still thin. According to a recent Miami Herald article, Florida insurers have been unable to provide concrete proof that lawsuits caused the skyrocketing premiums or the collapse of insurance companies. In fact, litigation has not been found to be the cause of any insurer’s insolvency.

Instead, many experts point to the manipulation of claims processes by insurers. The Miami Herald report revealed that insurers like Universal Property and Casualty and others have been accused of deliberately low-balling claims, forcing policyholders into litigation simply to get the compensation they are owed. While lawmakers and insurance executives blame lawsuits, they ignore the fact that bad-faith claims handling by insurers often forces homeowners to sue to recover what is rightfully theirs.

In the legislative response to the crisis, the focus has been on reducing the rights of policyholders to pursue claims through the courts, not on improving the behavior of the insurers. Rather than addressing these poor claims-handling practices, Florida lawmakers have passed measures designed to limit policyholders’ ability to hire attorneys or assign benefits to contractors, despite the fact that 78% of claims that led to lawsuits were the result of poor claims experiences with insurers.

Moreover, a study of the litigation impact published in the Journal of Insurance Regulation argues that fraud and litigation have been overstated by insurers, pointing to inflated numbers and misleading data that have fueled legislative actions benefiting the industry rather than consumers.

Insurer Fraud and Report Manipulation: The Case of Hurricane Ian

The fraudulent tactics of insurers go beyond inflated fees and misleading data. As revealed by whistleblowers on a 60 Minutes segment, several Florida insurers have altered damage reports to reduce payouts after Hurricane Ian in 2022. Adjusters reported that entire sections of their assessments were deleted, and damage estimates were slashed by up to 80%. These fraudulent practices, which were revealed in legal testimony, show that insurers are deliberately manipulating the claims process to avoid paying policyholders what they are owed.

These practices aren’t isolated to one insurer—whistleblowers testified that multiple companies across Florida were involved in similar schemes, leading to lawsuits accusing insurers of fraud. As a result, homeowners are left fighting to receive the compensation they are entitled to, even as insurers continue to post record profits.

Public Adjusters Under Attack: The Fight for Policyholders’ Rights

In addition to these challenges, public adjusters are facing an organized attack by the insurance industry. Insurers have increasingly added clauses to their policies that restrict or outright eliminate the use of public adjusters, leaving policyholders without the expert help they need to navigate the claims process. This is a direct attempt to limit policyholders’ access to fair representation and reduce payouts, all in favor of the insurance companies’ bottom line.

Public adjusters, such as Joseph Ross, have seen firsthand how insurers use engineered reports to deny legitimate claims. Claims that should be covered are denied based on biased engineering reports that ignore the true cause of damage, like when insurers blame sinkholes or termites instead of acknowledging the real impact of disasters like hurricanes. These reports are often manipulated to avoid payout, and policyholders are left without the support they need unless they hire a public adjuster.

The National Association of Public Insurance Adjusters (NAPIA) has been fighting against these tactics, with public adjusters across the country banding together to ensure that consumers maintain the right to representation. Legal challenges and advocacy efforts are underway to protect policyholders and uphold the role of public adjusters in the claims process.

Why This All Points to the Need for Reform of Attorney Fees

This persistent lack of transparency and cooperation underscores the need for reform in how attorney fees are handled in Florida’s insurance industry. When insurers fail to provide the necessary data or refuse to cooperate with regulatory investigations, it becomes increasingly difficult for policyholders to assert their rights and hold insurers accountable.

This is where attorneys play a crucial role. However, with the insurance industry’s ongoing evasiveness, the need for fair compensation for attorneys representing policyholders has never been more pressing. Without the proper legal framework, attorneys who are fighting for policyholders often face undue burdens and lengthy battles, ultimately leading to inflated costs that are passed on to clients.

Attorney fees must be reformed to reflect the reality of a system where insurers are actively working against the interests of policyholders. This reform would ensure that attorneys representing insureds have the necessary tools to effectively challenge insurance companies that engage in fraudulent or unfair practices. More than ever, policyholders need robust legal representation to navigate the complex insurance landscape, and it’s vital that reforms are enacted to ensure attorneys can be fairly compensated for this critical work.

Fraudulent Practices Exposed: A Call to Action for Policyholders

The findings of the study confirm what many industry insiders have suspected: Florida’s insurance market is rigged in favor of the insurers, and policyholders are the ones who suffer. Executives are siphoning off funds from their companies under the guise of “affiliate fees,” while homeowners are left facing steep premiums and inadequate coverage when disaster strikes.

This is where GlobalPro comes in. When you experience a loss or damage, it’s crucial to have a team of experts by your side. Our deep understanding of the insurance industry means we can spot fraudulent tactics and advocate for your rights. We work tirelessly to ensure that policyholders get the compensation they are entitled to, without falling victim to these manipulative practices.

Always Call Us First

Don’t let the complex and deceptive nature of the insurance industry leave you in the dark. Whether you are dealing with damage from a hurricane, fire, or any other catastrophic event, always call GlobalPro first. Our team is here to navigate the intricacies of your claim, expose fraudulent tactics, and ensure that your insurance company pays what it owes.

While Florida’s insurers may have been padding their pockets with your premium dollars, GlobalPro is committed to fighting for you, the policyholder. We have a proven track record of securing fair settlements, and our approach is always grounded in transparency and integrity.

In a market where profit often comes before protection, don’t settle for less. Let us advocate for you and help you rebuild after a loss. Call GlobalPro first — because you deserve the full compensation you’re owed, without the fraudulent fees and inflated costs.