Florida Regulators: Execs of Bankrupt Insurers Illegally Took New Roles

Florida law bars executive officers and directors who’ve worked for now-insolvent insurance companies from taking similar roles in the state’s industry. But a number of insurers are ignoring the so-called “no-fly” rule that took effect in 2002, the Tampa Bay Times reports.

Industry executives have flocked to new roles, and now the state’s insurance commissioner is cracking down.

Executive movement is common, but the state says no more

Authorities from the state’s Office of Insurance Regulation (OIR) report they’ve found 19 instances of executives who previously worked for now-insolvent insurers holding similar posts in other companies, the newspaper says. This list includes one former CEO, three former chief financial officers, and one general counsel, among others.

Holding such a role is a violation of Florida law unless the parties are able to demonstrate their “personal actions or omissions were not a significant contributing cause to the insolvency.”

OIR Commissioner Mike Yaworsky and his department told the Bay Times that it remains “serious about enforcing the law.” His office has sent letters to each of the companies employing these executives, letting them know they’re in violation of Florida law.

The letters threaten to revoke each company’s ability to write policies in the state if the individuals in question don’t step down, according to the Bay Times.

Officials must submit a detailed written statement that explains their former company’s insolvency, their own responsibilities at the company, and how those responsibilities didn’t lead to the insolvency, in order to be cleared.

Insurers have filed 22 waiver requests with the OIR on behalf of the executives. The office has decided on just two.

What’s next? Risking further chaos in the market

If regulators bar any of the insurers in question from selling additional policies, it could further shake up an already volatile Florida insurance market.

Since 2017, a total of 11 Florida insurers have gone into liquidation, with five more doing so since 2022. Policyholders statewide have paid state-mandated assessments to help pay claims that were once the responsibility of the now-failed insurers.

But Florida’s shrinking market isn’t confined solely to liquidated insurers. Insurers like Farmers, Bankers Insurance, and AIG subsidiary Lexington Insurance have all withdrawn from the state, and AAA has chosen to non-renew certain high-risk policies.

At the same time, the average home insurance rate in Florida was $10,996 in 2023 — the highest in the nation — and Insurify data forecasts it to climb by 7%, to $11,759, in 2024.

But good news could be on the way. The OIR recently allowed 13 companies to take on more than 350,000 policies from Citizens Insurance Corporation, the state’s insurer of last resort.

The OIR also approved eight new companies to enter the market, including Ovation Home Insurance Exchange, Manatee Insurance Exchange, Condo Owners Reciprocal Exchange, Orange Insurance Exchange, Orion180 Select Insurance Co., Orion180 Insurance Co., Mainsail Insurance Co., and Tailrow Insurance Company.

Nine other home insurers recently filed for rate decreases with the OIR.