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 in March. 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.
