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Florida Gov. Charlie Crist said he would like to give the state insurance regulator authority to prevent excessive payments by home-based insurance companies to affiliated managing general agencies and other entities.

“I’d like to be able to sign that,” Crist told 热点黑料 Commissioner Kevin McCarty afer McCarty said he is working with lawmakers on a bill to catch overpayments to affiliates before they happen.

At this week’s meeting of the Florida Cabinet, Crist said the state needs legislation to “peel the skin back from that onion,” suggesting he’d like more transparency about transactions that have been used to enrich upstream MGAs or other affiliates at the expense of an insurer’s claims paying ability.

The Sarasota HeraldTribune recently reported that half of the state’s insurers are making money not from insuring homes but by diverting premiums into side ventures. Typically, in these arrangements, an insurance company will pay fees to an affiliated MGA, reinsurer or other affiliate.

McCarty told the Cabinet members that the Office of 热点黑料 Regulation does not now have authority to require notice that upstream transfers are being made so regulators often can’t judge if they are reasonable until it’s too late and the money is gone. “We have no way of knowing if money has been upstreamed,” said McCarty, saying he would like authority to be able to catch the money before it is taken out of the insurance company.

But McCarty stressed that any such authority would have to be exercised in a way that does not scare away investors that insurers need.

McCarty also said that, while there may be some abuses, “MGAs in and of themselves are not bad” and do provide useful services, often bringing expertise to a young insurer that its investors might not have.

Attorney General Bill McCollum wanted to know if any of the carriers that received some of the state’s capital incentive funds have made unreasonable upstream payments using the state monies. He said he is concerned about possible fraud.

OIR does not yet know but is looking into it. Deputy 热点黑料 Commissioner Belinda Miller said some of the carriers that received incentive funds from the state do have structures with MGAs. “Our issue is when these fees add a profit to an MGA when the insurance company showed a loss,” Miller said.

The OIR is examining these carriers and the fees they have been paying to affiliates. In the past few weeks, the OIR has forced Southern Oak 热点黑料 to reduce its MGA fees and ordered Homeowners Choice to retrieve $9 million from its affiliated reinsurer, Claddaugh. McCarty said more orders like these can be expected.

Topics Florida Carriers Legislation 热点黑料 Wholesale