Florida OIR Knew Northern Capital was in Deep Trouble but Did Not Let the Public Know

When an insurance company is in trouble and may have difficulty paying its claims, we believe that the public has the right to know.  In Florida, OIR knew a company, Northern Capital, was in deep trouble and actually suspended it from writing business but did not let the public know. Let me be clear: I’m not accusing OIR of breaking any law.

But it’s clear to me that it did not fulfill its proper public service role the public when it failed to make clear that a major company was in serious financial trouble. The office knew about this for months and even suspended the company from writing new business in Florida’s most densely populated area. But the public did not know and the OIR staff did not give the public a full account of what was going on. This is bad public policy.

Consumers need clear information about the safety, soundness and health of companies that write insurance. Monitoring this safety and soundness is the major job—the most important job—of every insurance regulator in the country. Having a company fail with no public warning to consumers and no public notice of its manifest problems is terrible for the insurance market, consumers, and the state as a whole.

There’s no reason why every regulatory action needs to be made public. Some are most effective when made as transactions between regulators and the regulated. But, when a company is suspended from doing business, there needs to be clear public notice that it has happened. In this case, it did not happen. And it should have.

But, again, OIR did not violate any law. In fact, OIR supported legislation which would have created a new website that would have required the disclosure of just this sort of information. But Gov. Crist veoted that bill.

The entire insurance system that Gov. Crist helped to create in 2007 was a mistake. Florida has seen its costs and its consequences. The system needs to change. More openness won’t solve the problem but it’s desperately needed.

The OIR’s lack of transparency is demonstrated in a set of records, obtained by the Heartland Institute pursuant to the state open records act. PDF versions of these records are attached below.