Executive Summary
Florida homeowners' insurance costs increased by as much as 400% over the past five years. Insurance companies blame hurricanes, fraudulent claims from Assignment of Benefits (AOB) agreements, and lawsuits. However, a report from the Miami Herald revealed that insurance companies are using complicated financial tricks to hide billions in profits. While claiming financial hardship, insurers and their affiliates made around $14 billion in profits between 2017 and 2019, and paid out $680 million in dividends to shareholders.
Simultaneously, insurance companies also pressured Florida lawmakers to pass laws which have made it harder for homeowners to get fair payouts. Laws passed between 2019 and 2022 reduced legal options for homeowners and made filing claims more difficult.
At the end of the day, it's the homeowners of Florida who bear the brunt of this crisis. While insurance companies and their shareholders continue to amass significant profits, Florida homeowners are left grappling with escalating costs and diminishing protections.
Understanding Florida’s “Insurance Crisis”
Florida homeowners have watched their insurance premiums skyrocket, some by as much as 400% over the past five years in certain areas according to the Wall Street Journal. This dramatic increase has left many people wondering why rates are rising so quickly. Insurance companies often cite the increased frequency and severity of hurricanes, which lead to more expensive claims. They also blame the widespread use of Assignment of Benefits (AOB) agreements, claiming these lead to fraudulent claims and inflated repair costs. Additionally, insurers argue that high levels of litigation—allegedly driven by unscrupulous contractors and attorneys—are pushing costs even higher.
While these explanations contain some truth—there are indeed bad actors, such as fraudulent contractors, attorneys, and even a few homeowners who exploit the system—these cases are the exception, not the rule. These issues only scratch the surface. In fact, a study by Risk & Regulatory Consulting, LLC which was recently released to the public suggests that insurers have amplified these narratives to distract from the far more significant role their own financial manipulations play in driving up premiums.
My personal conversations with friends, family members, neighbors, and colleagues have illuminated several misconceptions people commonly hold about Florida’s insurance market. Some people are genuinely interested in uncovering the real issues affecting Florida’s insurance market, while others dismiss those working to help homeowners after significant loss by labeling the entire process as fraudulent. This widespread misunderstanding highlights the effectiveness of the insurance companies’ misleading narratives, which unfairly discredits those who provide essential assistance to homeowners during their most vulnerable moments.
A recent report reveals that these surface-level explanations are distractions from the financial manipulations happening behind the scenes. On February 22, 2025, the Miami Herald published an article titled Secret study found Florida insurers sent billions to affiliates while crying poor. This report provides a rare glimpse into the inner workings of Florida’s insurance industry. Though it was prepared for the Florida Office of Insurance Regulation in 2022, it was only made public in December 2024, after a two-year wait.
The findings expose how insurance companies strategically deflect blame by pointing fingers at hurricanes, AOB agreements, and litigation. In reality, these companies use complex financial maneuvers and affiliate networks to conceal profits, shifting the financial burden onto Florida homeowners.
Billions Hidden in Plain Sight: What the Study Found
The Miami Herald report revealed that while insurers publicly claimed financial hardship, they were quietly accumulating billions in profits. According to the study, the insurance industry recorded $61 million in net income, while affiliated companies—owned by the same parent corporations—made about $14 billion in net income. Despite these concealed profits, insurers continued raising premiums, citing financial losses.
Shifting Money to Affiliates
One of the key tactics insurers use to hide profits is shifting money to affiliated companies. Instead of handling operations like claims processing, underwriting, and account management in-house, insurers outsource these functions to affiliates within the same corporate group. These affiliates then charge inflated fees for their services, creating the illusion of higher operating costs for the parent company. This tactic is similar to a business owner ‘hiring’ themselves through a separate company they own, charging themselves an inflated rate for services. On paper, it looks like the business is spending a lot of money, but in reality, the profits are simply being shifted to another pocket. For insurance companies, this means they can claim financial hardship while still making billions behind the scenes
However, these fees don’t represent genuine expenses. They are a strategic way to move money internally. By funneling profits to affiliates, insurers can claim financial hardship while quietly amassing billions. This practice deceives both regulators and policyholders, allowing insurers to justify steep premium hikes under the guise of operational losses.
Forgiving Fees and Moving Profits
The study also uncovered that some insurers manipulate their financial statements by “forgiving” fees or debts owed by their affiliates. This tactic reduces the apparent profitability of the parent company, enabling them to claim financial struggles that justify premium increases or legislative relief.
However, these profits don’t disappear; they are simply shifted to other parts of the balance sheet where they attract less scrutiny. Affiliates providing essential services like claims management and underwriting often report substantial profits, even when the main insurance company claims losses. This shell game of moving profits around enables insurers to plead poverty while homeowners continue to bear the financial burden through higher premiums.
Capital Contributions and Dividends
When insurers report lower profits, they can claim the need for financial assistance, prompting capital infusions from parent companies. These capital contributions create the appearance of financial instability. However, after receiving these contributions, parent companies often turn around and pay out massive dividends.
The Florida Office of Insurance Regulation’s confidential Affiliated Fee Analysis revealed that between 2017 and 2019, affiliates of Florida insurers made approximately $14 billion in net income. Meanwhile, the insurers themselves reported only $61 million in net income, with one outlier skewing the data. Despite these supposed financial struggles, insurers collectively paid out $680 million in dividends.
Affiliates charged inflated fees that remained within the same corporate group, effectively concealing profits from regulators and the public. In some cases, affiliates even forgave $208 million in fees, further distorting the true financial health of insurers. These maneuvers allowed insurers to justify premium hikes while shareholders continued to enjoy substantial returns.
Insurance Companies and the Legislature
While insurers were shifting billions internally, they were also lobbying lawmakers for favorable legislative changes. Shockingly, “state lawmakers never saw the report” detailing these financial maneuvers. The Florida Office of Insurance Regulation stated that the study was not given to lawmakers because it was “not a formal examination report.” Although the study was completed months before emergency legislative sessions in 2022, it remained in a “draft” status, conveniently out of lawmakers’ hands.
Key Legislative Changes and Their Impact
Between 2017 and 2022, several legislative changes—supposedly aimed at stabilizing the property insurance market—further disadvantaged Florida homeowners.
In 2019, House Bill 7065 targeted AOB agreements, introducing a two-way attorney fee structure. This meant homeowners could be liable for insurers’ legal fees if they lost in court, deterring many from pursuing legitimate claims.
In 2021, Senate Bill 76 imposed strict pre-suit requirements. Homeowners were required to provide insurers with advance notice before filing lawsuits, delaying claims and adding administrative burdens. The bill also introduced a complicated sliding scale for attorney fees, making legal representation financially unfeasible for many policyholders.
Senate Bill 2-D, passed in May 2022, was framed as a solution to stabilize the insurance market. However, it limited contingency fee multipliers and fixed appraisal loopholes, making it harder for homeowners to challenge insurer decisions and secure adequate compensation.
These legislative changes consistently prioritized insurer interests over homeowner protections, discouraging legitimate claims and leaving Florida residents vulnerable.
The Big Picture: Who Really Wins?
The real winners in Florida’s insurance crisis are the insurance companies and their shareholders. By shifting billions through affiliate networks, claiming financial hardship, and influencing legislation, insurers have maintained profitability while homeowners face soaring premiums and limited options for recourse.
This complex web of financial manipulation has distorted the public’s understanding of the crisis, leading to widespread misconceptions about its causes. While hurricanes, litigation, and AOB agreements are convenient scapegoats, the evidence shows that the real issue lies in how insurers structure their finances to maximize profits at the expense of policyholders.
Florida’s insurance market remains a challenging landscape for homeowners, who continue to bear the financial burden. As long as insurers can operate with minimal transparency and accountability, the scales will remain tipped in their favor—leaving homeowners to navigate rising costs and diminishing protections.