For people in public office, the difference between “doing good” and “doing well” can be the difference between doing good and doing evil.
Florida lawmakers said they were doing the public a good by making it harder for policyholders to sue their insurance companies for denied claims. They claimed it would ease market turmoil, attract new businesses and reduce the nation’s highest homeownership rates. This is highly debatable, because the law (HB 837 from last session) does not require companies to transfer their savings. But that’s their story and they stick to it.
Now, at least one lawmaker who voted for that bill is looking to do well by cashing in. Republican Senator Joe Gruters approached his colleagues about investing in a new company, Village Protection Insurance. An application he submitted described a “unique and lucrative opportunity for investors.”
Gruters, 46, of Sarasota, is a certified public accountant and former chairman of the Florida Republican Party, who was state co-chairman of Donald Trump’s first campaign in Florida in 2016. The senator reported a net worth of $2.8 million last year.
Other companies are also luring lawmakers to invest, according to the Miami Herald and the Tampa Bay Times.
You may be wondering, “Is this legal?” The answer is yes. But it is wrong on two important levels: public opinion and public policy.
Public opinion towards politicians and distrust towards institutions is dangerously low throughout the country. Among the reasons, Pew Research reported, is that 63% of respondents believe that all or most elected officials run for public office to make a lot of money.
What Gruters proposes deepens distrust.
Sen. Jason Pizzo, D-Hollywood, alluded to that when he said why he wouldn’t invest in Gruters’ company or any other.
“I just don’t want to be directly involved in profiting from less restrictive or more favorable terms for insurers,” Pizzo told the Times and Herald. The appearances “probably aren’t very good,” but he said policyholders wouldn’t care if their rates dropped.
Insurance is highly regulated by a division of the Florida Department of Financial Services, which enforces laws passed by lawmakers and relies on them for appropriations. That legislators are also investors creates the possibility of exerting undue influence on regulators and self-dealing through legislation.
There is nothing new about state legislators seeking to enrich themselves from their positions.
In the 1960s, a Miami company, State Fire & Casualty, was known to be in financial difficulty, but the state’s insurance commissioner, Broward Williams, refrained from declaring it insolvent and putting it into bankruptcy. The reason, apparently, was that the chairman of the House Insurance Committee, Rep. Carey Matthews, a Democrat from Miami, was the insurer’s general counsel.
Acceptable ‘by current standards’
The scandal led to a U.S. Senate investigation, Williams’s 1970 election defeat, and Matthews’ indictment in 1971 on 19 counts of securities, mail, and wire fraud. He resigned from the Legislature, pleaded guilty to one charge and received five years of probation.
Over the years, many legislators have been licensed insurance brokers.
Rep. J. Hyatt Brown, a Democrat from Daytona Beach and speaker of the House in 1977-78, led a corridor that became the sixth largest in the country. Although the state insurance division can revoke licenses, that aspect of regulation is not as extensive as its authority and responsibility to ensure the financial health of the companies it represents.
Even there, experts say, investments by Gruters and other lawmakers would not cross a legal or ethical barrier.
But public opinion is very different.
“At its worst, Gruters’ behavior is probably considered acceptable by today’s standards,” Bonnie Williams, former executive director of the Florida Ethics Commission, said in an email to the Sun Sentinel Editorial Board.
He added that if the legislation were controversial – as the insurance bills were – “a legislator would be hard-pressed to argue that his later interest was a coincidence.”
The optics look bad.
The bar for a conflict of interest in the Florida Legislature is intentionally high because they can hold outside jobs, according to Ben Wilcox, research director for Integrity Florida, a watchdog group. He noted that lawmakers often sponsor bills and serve on committees that could benefit their own personal income. Senate rules require senators to vote unless a bill provides them with a “special private gain or loss.”
What Gruters is doing would not be a conflict of interest under Senate rules. But the outlook is bad for Floridians struggling with sky-high insurance premiums.
“I’m sure he’ll spin it by saying he’s trying to make insurance more affordable, but it will look to the public like he’s trying to take advantage of homeowners desperate to find affordable insurance coverage,” Wilcox said.
The Legislature is scheduled to meet for 60 days a year, but legislative service is increasingly time-consuming, with frequent special sessions, committee meetings in the months before the session, and frequent public appearances and meetings with constituents. Lawmakers earn $29,697 a year.
As a result, Florida’s low-wage “citizen legislature” is highly unrepresentative of how most Floridians live. A 2018 study by the Tampa Bay Times found that nearly half of sitting lawmakers were lawyers or CEOs. Only nine reported that legislation was their main source of income, but few could survive on that paltry salary.
This imbalance will continue as long as Florida perpetuates the myth that governing the third-largest state is not important enough to be a full-time job, and so will the temptation for lawmakers to do well on their own.
The Sun Sentinel Editorial Board consists of Editorial Page Editor Steve Bousquet, Deputy Editorial Page Editor Dan Sweeney, Editorial Writer Martin Dyckman and Editor-in-Chief Julie Anderson. Editorials are the opinion of the Board and are written by one of its members or a designee. To contact us, send an email to email@example.com.