State legislators have drafted a bill to strengthen regulations on insurance companies, but a key provision requiring greater transparency on insurers’ profits was removed during negotiations.
Initially, SB 7052 would have required insurance companies to report new information to the state, such as the actual cost of services provided by affiliate companies, the financial condition of the insurer and its managing company, and the amount of dividends paid by the parent company. However, this language was dropped during negotiations between the House and Senate to avoid upsetting Florida’s insurance industry.
Sen. Travis Hutson, the bill’s sponsor, said both sides agreed that they didn’t want to do anything to “upset the applecart” of Florida’s insurance industry. And that included not challenging the industry’s business model. “We’re trying to make sure the business model can stay intact, but the bad actors we’re going to go after,” he said.
The revised bill still grants state regulators new powers to investigate insurers and hold them accountable. It also requires insurance companies to adopt best practices for handling claims, mandates the creation of claims-handling manuals, and allows the Office of Insurance Regulation to request these manuals. Furthermore, the legislation increases fines against insurers and mandates regular reporting of actions taken against them to the Legislature.
The initial push for greater transparency aimed to address the insurance crisis in Florida, where domestic insurers’ business models often involve creating affiliated companies that charge the original insurer fees, resulting in excessive fees being cited as a reason for insurer insolvencies.
The bill, which insurers have privately opposed, passed the Senate without debate and is expected to be taken up by the House next week. Mark Friedlander, Florida spokesperson for the industry-backed Insurance Information Institute, said the bill “appears to be a direct response to negative feedback some legislators have received from their constituents” about the bills passed by the Legislature last year.
Sen. Hutson emphasized the need for fair treatment of consumers, stating, “We want to make sure the insurance company is treating the consumer fair. If they’re not treating the insured fair, then it’s a problem. … They should get severely penalized.”
This story was originally reported and published by Lawrence Power and published in the Miami Herald.