DeSantis signs bill to push more commercial policies out of Citizens

TALLAHASSEE – Condos and commercial buildings covered by state-run Citizens Property Insurance Corp. could be more easily transferred to lightly regulated surplus lines companies under a bill signed by Gov. Ron DeSantis late Tuesday.

The bill (SB 1028) was initially opposed by Insurance Commissioner Michael Yaworsky, who wanted tighter oversight powers over the surplus lines carriers that would be taking policies out of Citizens.

Surplus lines insurers are companies largely exempt from state regulations, and their rates and policies aren’t reviewed by the Office of Insurance Regulation. As of May 31, surplus lines carriers covered 778,000 policies in Florida, including 88,314 homeowner policies and 147,501 commercial property policies, according to the Florida Surplus Lines Service Office.

RELATED: Citizens Insurance proposes first rate cut in a decade as Florida insurance market stabilizes

Lawmakers changed the bill to give OIR more power to vet companies that would apply to take policies out of Citizens through a “clearinghouse,” and Yaworsky dropped his opposition.

The bill eventually passed 33-1 in the Senate and 88-19 in the House.

Under the law, Citizens is directed to set up a clearinghouse to move its condo and commercial policies into the private market. If a company makes an offer that is within 15 percent more than the Citizens rate, the policy must be moved to the private carrier.

A company must have an A- rating from A.M. Best, and insurance ratings agency, to participate in the program.

The law takes effect immediately but Citizens has until Jan. 1, 2027 to set up the clearinghouse.

Sen. Joe Gruters, R-Sarasota, who is also the chairman of the Republican National Committee, sponsored the bill. He and supporters of the measure cited the need to continue pushing policies out of Citizens as one of the reasons the bill is needed.

Citizens, which can impose assessments on all insurance policies in the state if a major hurricane wipes out its claims-paying ability, grew to 1.4 million policies in 2023. That alarmed some lawmakers about the risk of assessments on the rest of the market.

But the Legislature passed major changes in 2022 and 2023 aimed at limiting litigation costs for insurers, including by eliminating one-way attorney fees. Insurance companies had cited such costs as one of the main reasons for a surge in rates. At the time, a slew of carriers had gone bankrupt, destabilizing the market and leading to skyrocketing premiums.

Since then, however, litigation costs have lowered and more private companies have embraced the Florida market, including by taking over Citizens policies.

As of May 31, Citizens’ policy count was below 300,000.