Florida OIR Faults DFS in Move to Combine Regulatory Functions. DFS Pushes Back

In a March memo to lawmakers, Florida’s Office of Insurance Regulation sharply criticized the state’s rather unique two-agency insurance regulatory structure, arguing that the Department of Financial Services has dropped the ball on consumer complaints, investigations and insurer affiliate companies.

Late last week, DFS, now without a department head after former Florida CFO Jimmy Patronis was elected to Congress last week, pushed back. In a memo to legislators, DFS disputed many of the insurance office’s assertions and statistics. A department spokesman said the response memo was prepared by the DFS chief of staff’s office in coordination with the department’s deputy CFO and division directors after Patronis left for Washington.

It all highlights an inter-agency dispute that has rarely been seen publicly in the state.

“Put simply, DFS categorically rejects OIR’s unforeseen desire to remake Florida’s insurance regulatory system for its own institutional benefit,” the April 4 DFS memo reads. “Rather, DFS stands by its record of serving insurance consumers and seeks to collaborate with OIR to resolve legitimate issues.”

It’s not clear if Florida Insurance Commissioner Michael Yaworsky wrote the OIR memo. The unsigned paper proposed consolidating all of the DFS insurance regulatory functions under OIR, shaking up a structure that was created when Florida changed its constitution in 2003, creating the Florida Cabinet and assigning roles for different state agencies. OIR is technically part of DFS but has distinct responsibilities.

OIR regulates insurance companies, including certificates of authority, insolvency matters, rate filings and more. DFS, which also houses a number of sub-agencies and functions, is charged with handling complaints, liquidations, insurance agent and adjuster licensing and investigations. The OIR memo argues it would all be better under OIR’s purview, with OIR separate from DFS. The commissioner would continue to be appointed by the governor but would have to be confirmed by the state Senate, perhaps giving OIR a higher profile in state government.

“Florida is the only state in the country to bifurcate insurance regulation between two separate state entities,” OIR wrote. “This bifurcation has hindered the state’s ability to adequately protect consumers.”

Specifically, the OIR memo charged that Patronis’ department has received more than 52,000 complaints about property-casualty insurance companies in a recent five-year period but has referred only 5% of those, about 2,700, to OIR for further investigation into possible statutory violations. (The letter went on to say that OIR itself had completed 620 investigations last year. The math suggests that if OIR completed that many investigations each year, the five-year total would be a little less than the number of referrals from DFS to OIR.)

The DFS response memo said the OIR numbers are misleading. The 5% referral rate is not an indicator of inefficiency or a lack of understanding by staff but shows that DFS is able to address most complaints without referring them, often through agency-led mediation.

“Put another way, DFS resolved 94.8% of complaints and forwarded the remaining 5.2% to OIR for regulation intervention,” Patronis’ team noted in the response.

The DFS also offered its own numbers: In 2024, DFS resolved 78,000 consumer complaints and recovered $33 million for consumers. The types of complaints were not explained in the DFS memo.

Consumer complaints have taken on more importance in recent years as premiums have risen, policies have been non-renewed, lawmakers have limited claims litigation, and news stories have suggested that some insurers have failed to pay legitimate claims and have deceptively altered some field adjusters’ damage estimates.

Yaworsky, who took office in 2023, has signaled a new emphasis on consumer protection and holding insurers accountable. In a February memo to property insurers, he warned that carriers that wrongly claim concurrent causation, when a property may have wind and flood, to deny homeowner claims will be investigated.

The March memo about consolidating agency roles came to light in state news articles last week. The Tampa Bay Times and Miami Herald reported that the proposal may not move forward this spring: No bills have been filed in the current legislative session to combine agency functions. State Sen. Joe Gruters, rumored to be a candidate for the now-vacant CFO position, sided with DFS in comments to the Herald. If anything, Gruters said, the agencies’ function should be housed under the CFO, an elected official.

But Sen. Blaise Ingoglia, also said to be under consideration for the CFO job, told the newspaper that the lack of shared information is concerning and is a disservice to consumers.

To be sure, both agencies have been criticized and praised by insurers, agents and others in the industry in recent years. Some carriers had complained in 2022 that DFS had not done enough to investigate public adjusters working with contractors to inflate damage claims. But Patronis, who has leaned into partisan politics in his official role as CFO, also has been recognized for investigating adjusters, agents and contractors charged with fraud.

Complete information about consumer complaints has yet to be released, however. And DFS apparently has not concluded an investigation into insurers’ altering of independent adjuster’s estimates, almost 30 months after the independent adjusters made the charges at a legislative hearing.

On other issues, OIR’s March memo claimed that the office had been hamstrung by bureaucratic hurdles when cracking down on insurance company executives who had previously worked for insolvent carriers. Florida law bars officers of insolvent insurers, if they had a hand in the financial problems, from serving with other carriers for at least two years.

“OIR is tasked with determining whether officers and directors of insolvent insurance companies were a ‘significant contributing cause’ of the insolvency,” the memo contends. “However, OIR had to enter into a legal agreement with DFS to obtain information related to insolvencies and (had to) hire an outside firm to assist with a financial investigation already conducted by DFS, thereby duplicating work.”

DFS responded that the department had to enter into an agreement to share the information so that it would not jeopardize a potential $40 million directors and officers liability recovery. DFS’ Devin Galetta said only that the assertion was referring to companies that have gone into receivership and the ability for DFS to recover funds from those companies to return to policyholders.

The DFS memo appeared to leave little room for negotiation in the future.

“Consolidating Florida’s entire insurance regulatory system under a greatly expanded OIR bureaucracy makes little sense, given it would undermine Florida’s longstanding regulatory framework of DFS overseeing consumer protection and fraud prevention, and OIR regulating insurance companies,” the DFS response memo said. “This framework is critical to serving Florida’s large and complex insurance market. In addition, consolidation would eliminate DFS’s robust contributions to Florida’s insurance consumers and fail to address existing issues at OIR — for which its memo appears to blame DFS.”

Florida-based property insurance executives and associations could not be reached for comment or declined to comment on the sagacity of combining the agencies’ functions.