Jolly slams “corrupt homeowners insurance system” after news organizations’ report

David Jolly, the Democratic nominee for Florida governor, announced plans Monday to crack down on property insurance companies that use complex corporate structures to ship money to related firms whose profits are kept secret.

Jolly’s proposal came in response to articles in the Orlando Sentinel and South Florida Sun Sentinel on a secret state-funded report that found insurance companies claimed $432 million in losses in a three-year period, while paying fees to corporate affiliates of $1.3 billion. The news organizations uncovered the report and published it Friday, confirming a long-controversial financial practice.

“It’s not a secret that we allow our homeowners insurance companies to ship their profits out of state and keep their losses here,” Jolly said in an online news conference. “…. Folks, that’s corrupt. We have a corrupt homeowners insurance system in the state of Florida because our laws allow it. Because our current governor and our legislature allow it.”

If he becomes governor, Jolly said, he would take executive action to define what level of payments to affiliates were “fair and reasonable” to make sure insurance companies didn’t move excessive amounts of money to affiliates, a practice that could help them dodge Florida’s profit caps and rate regulations. Jolly said he would also support legislation to limit such payments and require insurance companies to make them public.

Byron Donalds, Jolly’s Republican opponent, also dubbed the hidden payments “unacceptable” last week, promising more transparency about insurers’ financial practices. The Donalds campaign did not respond to inquiries about Jolly’s plan Monday.

Before Jolly spoke, two Florida homeowners talked about the difficulties they had obtaining payments from their insurance companies after their homes sustained severe damage in hurricanes. Jolly said he expected insurance companies to fight back hard but that cracking down on excessive profits would help Florida homeowners.

“I’ll be honest, I expect to get sued, but at some point the governor’s got to stand up for homeowners like Katie and Brit and say enough is enough,” he said. “The giveaway to the insurance companies has been occurring for too long.”

Last week the Orlando Sentinel and South Florida Sun Sentinel published a complete state-commissioned report on insurer profits from 2017 to 2019, sparking more scrutiny of the state’s property insurance companies. That report had been buried when a consultant provided it to the state in 2022 amid a legislative effort to limit lawsuits against insurers, boosting their bottom line.

The report found at least 20 insurers were paying affiliates at a rate that was presumed to not be “fair and reasonable,” the standard set in state law, based on a comparison of the company’s net income with that of its affiliates. The news organizations counted at least 17 companies in the analysis, individually or as part of an insurance group, which publicly reported operating losses while also paying their affiliated companies more than they claimed to have lost.

Florida Insurance Commissioner Michael Yaworsky has described the report as a draft that “should never be relied upon as accurate.” Industry representatives have also pushed back on the study, questioning its methodology and premise.

But consumer advocates pointed to the report as evidence of the need for stricter state oversight. They argue that  the use of affiliates can hurt consumers if the companies reap inflated fees that deplete the primary insurer’s ability to pay claims.

State regulators have said they never updated or finalized the analysis, which was performed by the consulting firm Risk & Regulatory Consulting, LLC. The Florida House passed legislation earlier this year to expand the state’s authority to scrutinize insurers’ affiliate relationships and provide more transparency to the public, but those measures died in the Senate.

Jolly also said he supported legislation to restrict payments to affiliates. A bill sponsored by state Rep. Kim Berfield, R-Clearwater, that passed the House earlier this year would have created factors for evaluating whether fees paid to affiliates are fair and reasonable.

Those factors included the actual cost of services being provided, the relative financial condition of the insurer and the affiliate, debt levels, the amount of dividends paid by the insurer and affiliate, and whether the terms of the contract benefit the insurer and are in the best interest of policyholders.

Jolly said dramatic change was needed to reform Florida’s homeowners insurance market.

“The current state of homeowners insurance in Florida is we allow under-capitalized firms to come into Florida,” Jolly said. “We have a reinsurance fund, a hurricane fund to bail them out when the big storm happens. We allow them to ship their profits out of state, keep their losses here. When the storms occur, they deny 50% of the claims. They pay their CEOs $20 million in some cases. And when it gets to be too much, they fold their company and they leave.”

In addition to cracking down on insurance companies’ affiliates payments, Jolly’s insurance plan calls for using the state’s existing hurricane catastrophe fund as the main insurer for wind damage, a move intended to result in sharp rate cuts.

He says the fund would not be paid for by homeowners. Instead, he said, it would be financed by making insurance companies pay taxes they currently avoid and possibly through tourist taxes or taxes on real estate transactions.

Donalds has run ads claiming Jolly’s plan would create a “$1,000 hurricane tax” for Florida homeowners, but Jolly called that a lie. He said the $1,000 figure came from a study of an unrelated 2025 bill in the state House to extend state-run Citizens Property Insurance wind coverage to every Florida homeowner, a proposal different from his own.

Donalds’ plan for lowering insurance premiums calls for continuing existing plans aimed at cutting costs, such as reducing lawsuits, cutting red tape to speed rebuilding, shrinking the state-run Citizens Property Insurance to reduce the risk to Florida taxpayers and reducing regulations.

Donalds’ plan also calls for making more information available to homeowners. He proposes an online scorecard that would compare prices, including information on how often insurance companies deny claims and how quickly they pay them. Companies that failed to provide accurate data would face fines.

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