By Tony Fransetta, Guest column, Florida Times-Union
Its executives are fast tracking a major corporate restructuring that moves $1.6 billion of surplus funds to a non-insurance, for profit company.
This is not fair and equitable to policyholders.
Policyholders should vote down the $1.6 billion transfer and the new mutual insurance holding company that Florida Blue executives want to create.
Policyholders should reject
There are several reasons why policyholders should not approve this proposal by Florida Blue executives.
First, $1.6 billion in surplus funds would be transferred from Florida Blue to a new non-insurance affiliate, a for-profit stock company called Guidewell Health.
This raises a host of issues, which policyholders should consider prior to voting to approve or reject this plan at a meeting next week.
Clearly, Florida Blue’s premiums have been too high. If that were not the case, then this staggering $1.6 billion in surplus funds would not have been accumulated.
Policyholders should benefit from these excess funds that they were overcharged in premiums.
Transfer $1.6 Billion
Florida Blue wants to transfer the $1.6 billion to a for-profit company that is not an insurer and is not required to provide information on how the funds will be used.
These surplus funds should be rebated to policyholders.
Second, Florida law does not now include a current version of the model holding company statute as recommended by the Florida Insurance Consumer Advocate.
Reduced state regulation
This model statute would require basic financial reporting on all parts of the new corporate structure.
If the Florida Blue restructuring takes place, the new affiliated companies would not publicly report this financial data.
This could significantly reduce state regulation and transparency, which serve to protect policyholders.
From a regulatory point of view, it will be difficult for the state to monitor “enterprise-wide risk” and to assess the health of the group.
Third, Florida Blue claims that this restructuring is needed for it to diversify into a “health solutions company,” but its executives have refused to provide a vision or strategy to accomplish this.
Whims of executives
Policyholders have every right to expect that their premium dollars will be used to pay for the care they need, not to fund unrelated activities at the whims of executives.
Finally, Florida Blue has taken breathtaking measures to obtain quick approval for its mutual insurance holding company and the associated transfer of $1.6 billion in policyholder surplus funds.
A special amendment drafted by Florida Blue passed the Legislature in April without being heard by a single committee. On July 25, the Office of Insurance Regulation held a public hearing in Miami, and on Aug. 16 the Office of Insurance Regulation approved the corporate restructuring.
Florida Blue has announced a meeting on Sept. 10 in Jacksonville to seek policyholder approval.
This is a speeding train wreck that policyholders should reject.
About the author: Tony Fransetta is the president of the Florida Alliance for Retired Americans based in Wellington.