Florida’s homeowners have been paying ever-increasing insurance premiums, but where has all that money been going? A secret state report, which regulators conveniently left unfinished and never shared with lawmakers, might have held the answer. That is, until an investigative journalist, Lawrence Mower, pried it loose from the state’s grasp, as discussed in Secret Report Proves Florida Insurance Executives Wrongful Self-Dealing.

Now, Florida’s current and former insurance commissioners—Michael Yaworsky and David Altmaier—are under fire from lawmakers who want to know: Why was this report buried? Who benefited from its secrecy? And how deep does this scheme go?

Friday’s landmark hearing of the Florida House Insurance and Banking Subcommittee was the first step in uncovering the truth. But if you thought we’d get a clear and honest explanation from the people in charge, think again. Instead, we got a masterclass in regulatory doublespeak from the former insurance commissioner, who claims he forgot to follow up on the report. The current insurance commissioner, who was not there when the report was delivered, says documentation he found could not determine why the report was not finalized.

A “Flawed” Report That Just Happens to Be True?

The Times/Herald revealed that the 2022 report, commissioned by the Florida Office of Insurance Regulation (OIR) and costing taxpayers $150,000, found that Florida insurance companies were bleeding money on paper while their affiliates were making billions.

Here’s what the report discovered:

  • Florida insurers claimed losses of $432 million between 2017 and 2019, but their affiliates—companies they own and control—pocketed $1.8 billion in net profits.
  • Insurers funneled massive sums into these affiliates through questionable management fees and claims handling fees, keeping the money out of reach of state regulators.
  • These tactics helped justify skyrocketing rate increases while leaving insurance companies financially weaker and unable to pay claims. Meanwhile, insurers still managed to pay out $680 million in dividends to their shareholders.

In short: Insurers were crying poor while their own subsidiaries were getting rich.

One obvious question posed yesterday was: “Why Didn’t the Public See This Sooner?” According to former Insurance Commissioner David Altmaier, the report “raised red flags” but was never completed—a convenient excuse for why it wasn’t shared with lawmakers or used to protect consumers.

When asked who made the decision to stop investigating, Altmaier responded: “I would say nobody made that decision.”

Nobody? The report was commissioned, paid for, and submitted in April 2022, but somehow no one decided to act on it? It gets worse.

Altmaier admitted that when he left office in December 2022, he never even mentioned the report to his successor, Michael Yaworsky. Why? Perhaps because three months later, Altmaier took a high-paying job with a lobbying firm representing insurance companies. And just last month, he was given an executive role at a reinsurance trade group—an industry that thrives on higher insurance rates and financially weak insurance companies.

If this isn’t the textbook definition of the “revolving door” between regulators and the industries they’re supposed to police, I don’t know what is.

Yaworsky: “I Didn’t Know About It”

Florida’s current Insurance Commissioner, Michael Yaworsky, says he wasn’t aware of the report until October 2024—nearly two years after it was completed.  And yet, when the Times/Herald first asked for it in November 2022, OIR told the newspaper that the report did not exist. When lawmakers asked why it took so long for the report to be released, Yaworsky’s response was: “I don’t know.” But don’t worry—he “takes ownership” of the failed process of not turning over the report quicker.

That’s nice, but homeowners don’t need apologies. They need transparency and accountability. I personally like Commissioner Yarworsky. He is asking for more power to enforce laws and promises more transparency. It does not help when his office takes forever to turn over public documents and cannot explain why there aren’t any documents to help explain what happened to the report after it was delivered in 2022.

What This Means for Florida Homeowners

While lawmakers grilled Altmaier, the key takeaway from the hearing is clear: Florida’s insurance regulators have failed to act in the public’s interest and need more laws demanding better oversight.

Instead of aggressively investigating how insurers were using affiliates to siphon profits, regulators:

  • Sat on a damning report for three years.
  • After burying a report from an admittedly reputable company, gave misleading responses to public records requests.
  • Allowed insurers to justify massive rate increases based on manipulated financials allegedly because transparency laws are not strong enough.
  • Let a former commissioner walk out the door and into a lucrative lobbying job. That issue was fixed with a new law that took effect in 2023.

And now, Yaworsky is asking lawmakers to define what “fair and reasonable” means when it comes to insurance affiliate fees. Seriously? The report already concluded that most of these fees were NOT fair and reasonable—and that was back in 2022. Still, a fair and reasonable affiliate fee is one that ensures insurance consumers aren’t overpaying for insurance because of hidden, inflated fees that enrich affiliates while weakening insurers. Any fee structure or transaction between related, affiliated, Managing General Agents or similar companies that hides profits, manipulates financial statements, or justifies unjustified rate increases should be deemed unlawful

The criteria should be those already found in the NAIC Model laws and should include these considerations:

  • Fees Must Be Commensurate with Market Rates
    • Any fees paid to affiliates for services (g., claims handling, policy administration, underwriting) must be comparable to the rates that independent, unaffiliated third-party vendors would charge for the same services.
    • Insurers should demonstrate through independent benchmarking studies that affiliate fees are not inflated beyond market rates.
  • Fees Cannot Exceed a Set Percentage of Premiums
    • Total affiliate fees must not exceed 15-20% of gross written premiums unless an affiliate and insurer prove a higher fee structure is justified by operational necessity, not profit shifting.
    • Managing General Agent (MGA) fees specifically should be capped at no more than 20% of gross written premiums, unless an MGA and insurer prove a higher fee structure is justified by operational necessity, not profit shifting.
  • Transparent Cost Justification

Insurers must fully disclose all payments to affiliates, including:

    • Breakdowns of all services provided
    • Detailed cost analysis of each service
    • Any profit margins built into affiliate transactions
    • Insurers should prove that these fees reflect actual costs and not excessive markups that enrich affiliates at the expense of policyholders.
  • Prohibition on Circular Transactions & Fee Forgiveness
    • No affiliate should be allowed to “forgive” fees to artificially manipulate an insurer’s financial position.
    • No insurer should be allowed to pay dividends or executive bonuses while claiming financial distress due to high affiliate fees.
  • Independent Review & Regulatory Oversight
    • All affiliate transactions should be subject to mandatory annual review by independent auditors, with reports provided to the Office of Insurance Regulation (OIR).
    • Any affiliate fee arrangement that exceeds predefined thresholds should trigger an automatic regulatory review.
    • Insurers should be required to seek OIR approval before implementing any new affiliate fee structure that exceeds a reasonable cap.
  • Public Transparency & Reporting

Insurers should be required to publicly report all affiliate transactions in a clear and consumer-accessible format, including:

    • Percentage of total premiums paid to affiliates
    • Profit margins of affiliates
    • Justification for any fees above market rates
    • Limit trade secret laws regarding insurer and affiliated company transactions so these become public.

Yaworsky noted issues of Florida’s trade secret laws, which insurers and affiliates hide behind to prevent and comply with disclosure. Florida insurers and their affiliated companies have frequently misused trade secret protections to hide financial dealings, justify excessive rate increases, and shield their profit-shifting strategies from public scrutiny.

Trade secret laws exist to protect innovation, not to shield corporations from accountability. Florida’s insurers have weaponized these protections to hide their most damning financial practices, making it harder for consumers, lawmakers, and regulators to hold them accountable. These common-sense reforms would ensure that insurers can no longer use secrecy as a loophole to justify unjustified rate hikes, hide profit-shifting to affiliates, or suppress damaging reports like the one exposed in this week’s hearing.

Here are a four suggestions for laws that should apply to trade secret claims by insurers:

  1. Prohibit Trade Secret Protection for Rate-Setting and Affiliate Transactions
  • No insurer or affiliate should be allowed to claim trade secret protections over any financial information used in the calculation of consumer insurance rates.
  • Any affiliate transactions (including payments to MGAs, claims handlers, reinsurers, and third-party administrators) must be fully disclosed and cannot be shielded as trade secrets.
  • All fees, commissions, and profit-sharing agreements between an insurer and its affiliates must be publicly available for review by regulators, lawmakers, and consumers.
  1. Require Justification for Trade Secret Claims
  • If an insurer or affiliate claims trade secret protection, they must:
    • Submit a sworn affidavit from an executive justifying why specific data qualifies as a trade secret.
    • Prove that the information is not already disclosed in similar industries and that public release would cause actual, demonstrable harm.
    • Provide a public summary of the withheld information so that consumers, regulators, and watchdogs can understand the general nature of what’s being hidden.
  1. Automatic denial of trade secret claims should apply if:
  • The information relates to consumer pricing, claims payment practices, financial transactions with affiliates, executive compensation, or dividends paid to shareholders.
  • The data is used in any public rate filings or justification for legislative policy decisions.
  1. Independent Audit of Trade Secret Claims
  • An independent regulatory panel (separate from the OIR) should be created to review all trade secret claims by insurers and affiliates.
  • The panel should have the authority to reject overbroad claims and mandate public disclosure when necessary for consumer protection.
  • Any insurer that falsely claims trade secret protection to hide unlawful financial practices should face significant fines and possible license suspension.

These affiliated transaction laws should change so that the burden of proof is placed upon the insurers that must prove the transactions are fair and reasonable. The language should be something like this:

The insurer, affiliate, or MGA carries the affirmative burden of proof to clearly demonstrate that each agreement, transaction, or financial arrangement is fair, reasonable, and free from conflicts of interest, self-dealing, or excessive profit-taking. This demonstration must be supported by thorough, transparent, and independently verifiable documentation provided proactively to the Florida Office of Insurance Regulation upon request or during routine regulatory reviews.

Florida House Speaker Daniel Perez has ordered a full investigation into whether insurers used “accounting tricks” to hide profits, with lawmakers demanding answers on who stopped the investigation, whether Altmaier suppressed the report for his future career, and if insurance executives will testify. While legislators appear eager to pass reforms, the real test is whether they will take meaningful action to hold insurers accountable. With mounting public frustration and industry scrutiny only increasing after this first hearing, the fight for transparency is just beginning—will the truth prevail, or will this investigation be buried like the report nearly was?

Thought For The Day

“Truth will ultimately prevail where there is pains taken to bring it to light.”
—George Washington