Hurricane season is just around the corner, and a new insurance report warns some insurers may not have enough to pay out on claims if a big storm hits.
The report is the second in just two months that warns many companies are paying out large dividends to investors and leaving their reserves to pay claims low.
The news comes as Florida legislators this month launched an investigation into the state’s home insurers.
The damning report released by Weiss Ratings claims Florida home insurers shifted $2.1- billion off their books to affiliates, and millions went to investors between 2017 and 2023, leaving some companies unable to pay claims.
“It's continuing, and it's getting worse. They have been losing more and more money through 2022 and paying dividends right out of those losses,” said Martin Weiss.
His company, which commissioned the report, calls the practice risky business.
“Even in 2023, which is the latest year for which we have data available, they paid out over $2 in dividends for every $1 in earnings. They're not adding to surplus. If anything, they're reducing their surplus and reserves,” Weiss explained.
He warned this practice puts policyholders at risk.
“Which could make it more difficult for them to meet the claims of policyholders, which I think should be the priority, not the investors,” Weiss noted.
When asked if he turned his findings over to state lawmakers, Weiss responded yes, saying the state was very interested in the findings.
That’s because the state launched an investigation after an earlier study made the same claims that companies were funneling money to investors in 2017.
This new report suggests the practice is continuing. Doug Quinn with The American Policyholder Association called the report damning.
“The insurance market is great in Florida for everybody but the policyholders who are funding the whole system,” Quinn stated.
Mark Friedlander with the Insurance Information Institute rebuked the reports, saying Wednesday,
"The Florida market has stabilized due to legislative reform, and consumers are beginning to see the benefits,” he responded.
However, policyholder Marilyn Steiner said she has not seen her rates fall.
“The rates have gone up tremendously, and I've had the same insurance company for 27 years,” Steiner said.
The report warns a big storm could leave homeowners empty-handed.
“I put in a claim five years ago, and it was denied,” Steiner said.
With hurricane season around the corner, homeowner Maureen Martinello is among those concerned.
“We've never made a claim. So, you expect them to be there if you need them. Yes, I would hope so,” Martinello said.