10 - The $14 Billion Insurance Secret in Florida

Florida’s insurance market is in chaos but the real story goes deeper than lawsuits and hurricanes. This episode uncovers the hidden financial structures, political decisions, and billion-dollar loopholes shaping the crisis in 2026.

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Transcript

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Okay, let's do it. Let's talk about Florida. I mean, who doesn't love Florida? It's the sunshine state, it's where I work, it's where I live, and for decades, it has been the ultimate American dream factory. You work hard, you retire, you buy a house near the beach, but right now that dream is being quietly and systematically dismantled. And it's not because of a hurricane, but by a piece of paper. If you live in Florida right now, there's a good chance that you already know what I'm talking about. This is your homeowner's insurance. And between 2019 and 2025, the average property insurance premium in Florida skyrocketed from about$1,988 to a whopping$5,600. In places like South Florida, where I live and work, it's easily over$6,000. And for some, it's hitting even$17,000 or$19,000 every single year. This is nearly triple the national average. And of course, they blame the weather, but mostly they blamed you. They blame me. They blame greedy homeowners, shady roofing contractors, and blood-sucking trial lawyers who were suing insurance companies into bankruptcy. And based on that story, the Florida government passed sweeping historic laws that stripped away your right to fight back when an insurance company denies your claim. But what if? What if I told you that while insurance companies were standing right in front of lawmakers crying poverty and begging for rate hikes, they were secretly funneling billions of dollars out the back door to their own affiliated companies. Now, before we get to that, I need to ask you for a favor, because these videos are time consuming to do. And if you like stuff like this and would like to see more of it, then please consider subscribing to this channel. It will mean a lot to me, and it will also motivate me to spend more time to create more content just like this. Okay, let's get back to the video. Today we're gonna follow the money. Of course, it's always about the money, right? And we're gonna look at a secret financial report that state regulators try to bury, the revolving door politicians getting rich off the very industry they were supposed to regulate, and why, despite all of the reforms, you are still paying the highest insurance rates in all of America. And to understand what's happening right now in 2026, we need to rewind the crisis all the way back to 2022 and 2023. This is when insurance companies were going bankrupt or fleeing the state left and right. The ones that stayed were jacking up the rates. The industry's argument was simple: Florida has a lawsuit problem. In other words, people in Florida like to sue. And to be fair, they did have a terrifying stat to back this up. By 2018, Florida accounted for almost 80% of all homeowners' insurance lawsuits in the entire United States, even though the state only produced about 8 to 9% of the nation's actual property claims. The insurance lobby said this was because of two things. One, one-way attorney fees, which meant that if you sued your insurance company for underpaying you and you won, the insurer had to pay your lawyer's bill. And two, the assignment of benefits. This is a system where a roofer could take over your claim and sue the insurance company directly. So what happened? Well, Governor Ron DeSantis and the Florida legislature went to work. In 2022 and 2023, they passed massive sweeping tort reforms, most notably Senate Bill 2A and House Bill 837. So what do these bills do? Well, one, they completely eliminated one-way attorney fees. Number two, they banned the assignment of benefits. And number three, they made it incredibly hard to sue your insurance company for acting in bad faith. This was described as a Christmas gift to the insurance industry. The promise to the public was simple. If we stop these lawsuits, the insurance companies will save money and your premiums will go down. But let's look at what actually happened. The lawsuits did drop. In fact, insurance litigation filings fell by 23% from 2023 to 2024, and they kept dropping in 2025. But your rates, they didn't drop, they kept going up. But why? Because taking away a homeowner's ability to hire a lawyer fundamentally shifted the balance of power. Let's say a pipe burst in your house and causes$15,000 in water damage. The insurance company looks at it and says, Eh, we're denying this claim. We think it's normal wear and tear. Under the old rules, a lawyer would take your case because if they proved the insurer was wrong, the insurer had to pay their legal fees. Under the new rules passed by DeSantis, well, you have to pay your own lawyer out of pocket. And no lawyer is going to take a$15,000 case if it costs$10,000 to litigate. It's simply economically impossible. And the insurance companies know this. They know that you can't fight back anymore. So what did they do? Well, according to data released after the reforms, insurance closed 47% of all damaged claims without paying a single cent. 47% without paying anything. That is the highest rate of unpaying claims in a decade. Consumer advocates call this the new culture of deny now and worry later. So the insurance are paying out fewer lawsuits and they are denying almost half of all claims. They should be swimming in cash now, right? They should be lowering their premiums, right? But no, instead they keep telling the government that they are on the verge of bankruptcy and they needed to raise their rates even higher. Which brings us to the most explosive part of the story, the secret report. In early 2025, investigative journalists got their hands on a bombshell document. It was a report commissioned by the Florida Office of Insurance Regulation. This is the government agency in charge of watching the insurance industry. The report finished in 2022, right when the legislature was debating those massive reforms that stripped away your rights. But the government didn't show it to the public. They didn't even show it to the lawmakers voting on the bill. They buried it for nearly three years. When you look at the numbers inside this report, you will immediately understand why. In Florida, the state caps the amount of profit a property insurance company can make at about 4.5% of premiums. That is designed to protect you from getting gouged. But insurance companies found a loophole. It's called the managing general agent or MGA model. Instead of doing the work themselves, the insurance company hires a sister company, an affiliate owned by the exact same parent corporation, to handle their claims, their marketing, and their paperwork. And because this sister company is not technically an insurance company, it is not subject to the 4.5% profit cap. So the insurance company pays this affiliate massive inflated fees. Okay, look at this data from the Baird report. Between 2017 and 2019, the 53 domestic insurance companies operating in Florida told regulators that they were struggling. Collectively, they reported a microscopic net income of just$61 million. Some even reported net losses of hundreds of millions of dollars. They used these losses to beg the government to let them raise your rates. But during the exact same three-year period, those unregulated sister companies, the affiliates, raked in a staggering$14 billion in profits. This should make your blood boil. Let me say that again.$14 billion. This is a financial shell game. They cried poverty to the regulators to jack up your premiums while quietly shoveling your money out the back door to their own investors. The report found that nearly two-thirds of the insurers examined had fee structures with their affiliates that were completely unfair and unreasonable. Some affiliates were charging a fee as high as 63% of their total premiums. Now, if lawmakers had seen this report in 2022, the entire narrative that lawsuits are their only problem would have collapsed. So the question is, why was this hidden? And when you ask a government agency why they would hide a report showing that its citizens are being fleeced, you have to follow the campaign cash. The head of the Florida Office of Insurance Regulation at the time of this report was buried by a man named David Altemeyer. He commissioned the report, received it, and kept it quiet. In December of 2022, right after the pro industry reforms passed, Altemeyer resigned. How convenient. And you might be wondering, well, where did he go? Three months later, he walked through the revolving door and took a highly paid job as a lobbyist at the Southern Group. This is the group representing the exact same insurance industry he was just supposed to be regulating. A little while later, he took an executive role at a major reinsurance trade group. And what about the man at the very top, you know, Governor Ron DeSantis? Well, since January of 2019, the insurance industry has pumped a whopping$9.9 million into the Republican Party of Florida and the Friends of Ron DeSantis political committee. Now, if we look at just his specific committees, DeSantis pulled in$3.9 million directly from insurance players. In one single day, hundreds of state farm agents coordinated a drop over$150,000 into his campaign. Two property insurance firms gave$125,000 just to fund his 2023 inauguration party. And the favors went both ways. DeSantis thanked them, essentially, by appointing three people to the Board of Citizens Property Insurance. This is the state-backed insurance of last resort that holds hundreds of thousands of policies here in Florida. Every single one of them had current ties to the insurance industry or banking. Even the massive$2 billion taxpayer-funded reinsurance bailout that DeSantis signed into law in 2022 was basically a direct subsidy to the very companies funding his political ambitions. So here we are in 2026. The state government is taking a victory lap. DeSantis and the current insurance commissioner, Michael Yaworski, are pointing to data showing that rates are finally starting to tick down just a little bit. They're even bragging that 17 new insurance companies have entered the Florida market. But as always, you need to look under the hood. The foundation is still incredibly fragile. These aren't massive, rock solid national companies. Many of these 17 new insurance are small, highly leveraged startups. Some of them are being run by the exact same executives who drove other Florida insurance companies into insolvency just a few years ago. For example, there's a company called VYRD. This was approved to take over 42,000 policies. Its CEO used to be the president of Lighthouse Property Insurance, a company that went completely insolvent and liquidated. Another new company, Viceroy, is run by the same guy who ran Monarch National. This is a company that the state fined over$300,000 for mishandling hurricane claims. And now there's this new trend in Florida. It's called reciprocal exchanges. Companies like Standin' Praxis use this. These aren't traditional companies. They are models where the policyholders essentially insure each other, and you have to pay an extra 10% surplus contribution just to join. Meaning the risk and the upfront capital is being pushed right back onto you and me, the homeowner in Florida. The outrage over this buried$14 billion affiliate scandal has finally forced the Florida legislature to act. Right now, in the 2026 session, they are pushing House Bill 1399 and House Bill 767. HB 1399 specifically targets the MGA loophole, requiring insurers to prove that fees they pay to their sister companies are actually fair and reasonable. It gives the state the power to restrict those shady fund transfers. Meanwhile, HB 767 is trying to force insurers to give you a plain language rate transparency report every time you renew. This breaks down exactly how much of your premium is going to go to claims, how much goes to reinsurance, and how much is pure profit to the companies. Even the physical buildings are changing. By the end of 2026, the ninth edition of the Florida Building Code will take effect, mandating that building envelopes in high-risk zones to be built to withstand 160 to 180 mile per hour winds. Okay, so what does this all mean? Let's let's wrap it up. Florida's insurance crisis is a masterclass in the political economy of risk. It's what happens when extreme climate vulnerability meets a regulatory system captured by the industry it's supposed to police. Yes, fake claims and lawsuit abuse were real problems, but they were weaponized and used as a smoke screen. The industry used their anger over high prices to strip away your legal rights, all while they quietly funneled billions of dollars into their own pockets. As Florida enters this new era of stabilization, the question isn't just whether your premiums will go down by a few hundred bucks next year. The question is what happens when the next Category 5 hurricane hits the coast. Will these new undercapitalized companies actually pay your claim? Or will it be you, or will it be me, or someone we know or neighbor be left holding the bag while the executives retreat to their beach houses, safely insulated by their unregulated shell companies? And the good news about all this, we actually have power as the voter. The problem is not a lot of voters are totally educated on what's going on. And that's why I want to make more content like this. So again, if you made it this far and you enjoyed this content and you really want to make a change in the Florida housing market, please consider subscribing to the channel and reach back to me with other things that you would like me to talk about. And with that, I want to thank you for watching. And if you're thinking about buying or selling a house in Southeast Florida, well, reach out to me and the Homes by Coozy team because we will love to help.