Florida Report on MGAs Fell Through the Cracks, Commissioners Say

A draft report examining Florida insurers’ relationships with their managing general agents fell through the cracks and was never finished, a current and a former state insurance commissioner told state lawmakers at a hearing last week.

“We need to make sure we go and see if there’s a fire burning or not,” former Commissioner David Altmaier told the Florida House Insurance Subcommittee on Thursday. “That was the effort I thought was underway when I left the office.”

The current commissioner, Michael Yaworsky, said the Office of Insurance Regulation may have failed to follow up on the report due to staffing issues and other concerns as the property insurance crisis escalated in recent years.

The subcommittee, chaired by Rep. Brad Yeager, called the officials to the hearing after House Speaker Danny Perez pledged House investigations after news reports in March. The Tampa Bay Times and Miami Herald’s Tallahassee bureau reported that the OIR analysis suggests that Florida insurers had sent billions of dollars to their MGAs while pleading dire financial straits and seeking rate increases. Legislators have said they were not made aware of the report when insurance reforms were approved in 2022.

Industry voices have pushed back, noting that the OIR report was incomplete, did not tell the full story, that MGAs were not siphoning money away from carriers and that OIR scrutiny on MGAs already has been tightened. Fees paid to managing companies are not unusual and not out of line, Florida insurance agents and consultants have said. Yaworsky said his office needs more authority to review what is considered fair and reasonable services provided by insurers’ affiliate companies, the Times reported.

Rep. Jennifer Kincart Jonsson noted that the OIR report showed one insurer’s MGA reported a $7 billion profit, while the carrier showed a net loss of $37 million. Altmaier called that “a deeply troubling data point,” that OIR staff had concerns about. “We didn’t know where that income went; we didn’t have that visibility at that time. So, we had a lack of understanding about, ‘is that $7 billion in profit sit there and act as a rainy day fund for the insurance company down the road. So there are a lot of questions that we also had.”

Lawmakers on the subcommittee vowed to uncover more details about MGAs and insurers. The three-hour hearing can be seen on the Florida Channel. Further hearings are planned for this week.