Lightly regulated insurance companies will soon be able to take over policies from Citizens Property Insurance Corp. after Gov. Ron DeSantis signed a bill Friday that includes that provision.
The bill, HB 1503, contains several pieces related to Citizens, including allowing the state-run company to obtain patents, copyrights and trademarks. But the part of the bill grabbing most attention from lawmakers was allowing regulators to approve take-outs by surplus lines companies.
Surplus lines are out-of-state insurers that haven’t been admitted to the state market. Their rates aren’t approved by the Office of Insurance Regulation and any dispute over a claim must be resolved in a court outside of Florida, but surplus lines companies are still subject to Florida regulatory oversight in some areas of the law. Typically, surplus lines carriers insure riskier, more expensive homes the domestic market won’t cover.
To qualify as a surplus lines takeout company under the new law, the insurer must be A-rated by the AM Best ratings agency and OIR must approve their takeout plan. Citizens properties with a homestead exemption won’t be available to be taken over by surplus lines carrier.
The bill passed unanimously in both chambers.
Domestic carriers are already allowed to take over policies from Citizens, once approval by OIR is given.
Citizens customers must opt out of the process if they don’t want to join the new company, but under existing law Citizens customers must go to the private market if they are offered a rate within 20% of Citizens’ rate.
Citizens has nearly 1.17 million policies and some lawmakers have sought to reduce its policy count as a way to reduce the risk of assessments on all homeowners policies if a major hurricane or series of storms were to wipe out Citizens’ claims paying ability.
As the private market struggled in recent years, which saw seven companies go bust, several other companies end coverage for thousands of homeowners and other companies impose large rate hikes, Citizens’ policies skyrocketed. At the start of 2021 it had 542,739 policies, which ballooned to 1.4 million by October 2023.
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