Florida's Insurers Slight-of-Hand Money Moves
By Dian Vujovich
Personally, I think insurance companies and credit card companies are run by a bunch of greedy crooks. Feel free to quote me on that. This blog will look only at the insurance companies.
There is a terrific story at HeraldTribune.com posted this morning titled “How Insurers make money on the side” that was both eye opening and educational for anyone wanting a closer look at insurance companies and how their money mojo works.
The piece took a year of research, looked at 70 Florida-only insurers and taught me that about half of money Florida’s home insurance companies make doesn’t come from the premiums charged homeowners but from investing those premiums into other things like sister companies.
I also learned that Floridians get to pay a whole lot more for their home insurance coverage than most American’s living in the other 49 states.
Here are few more tidbits from the piece:
-If you’ve ever wondered why insurance companies cry that they’re broke, in 2008, $1.9 billion in policyholder money was moved from regulated insurers “where profits are capped and dividends are restricted” to separate companies that are owned by the same people. Once moved, that money can’t be used to pay insurance claims but can be used to pay owners and investors. In those cases there is no cap on profits or salaries or bonuses, etc.
-Overhead costs “not related to hurricane or other disasters” were 50 percent higher here than the national average.
-Florida’s legislators love-the-insurance-companies attitude bars regulators from requiring sister companies to report their finances.
-And, while companies complain of loses, from 2006 through 2008, Florida insurers paid $38 million in bonuses and $32 million in other perks to their officers.
You will want to read this piece. It’s at: http://tinyurl.com/ylfdpkk .
To read more articles, please visit the column archive.