Supporters argue the bill will reduce taxpayer exposure if Citizens faces major losses after a storm.
Gov. Ron DeSantis has signed Sarasota Republican Sen. Joe Gruters’ measure to shrink the state-backed Citizens Property Insurance Corporation by steering more commercial policies into the private market.
SB 1028, which takes effect immediately, expands Florida’s insurance clearinghouse system and creates new mechanisms to keep certain commercial residential and commercial nonresidential risks out of Citizens private coverage is available.
The new law is part of the state’s long-running effort to return Citizens to its role as an insurer of last resort and reduce the financial exposure tied to major storm losses.
Under the law, Citizens will be barred from issuing new coverage for commercial residential and commercial nonresidential risks if an approved “surplus lines insurer” offers comparable coverage and the total cost is no more than 15% higher than the cost of coverage through Citizens.
The legislation also requires Citizens to implement separate commercial lines clearinghouses by January, one for authorized insurers and another for surplus lines insurers. Commercial applications would first go through the authorized-insurer clearinghouse then the surplus-lines clearinghouse if no comparable offer is made.
The new law requires Citizens to select commercial clearinghouse administrators within 90 days and requires the Office of Insurance Regulation to review and approve the program within three months.
The change comes as lawmakers have spent years trying to reduce Citizens’ exposure amid Florida’s volatile property insurance market. Citizens was created as an insurer of last resort, but its policy count surged in recent years as private carriers raised rates, limited coverage or left parts of the market.
During the Legislative Session, supporters argued the bill will reduce taxpayer exposure if Citizens faces major losses after a storm by moving risk back into the private market. Opponents raised concerns about pushing policyholders into the surplus-lines market, where rates, forms and fees are not regulated in the same way as standard market insurance.
The Senate approved the measure 33-1 in March, and the House followed with an 88-19 vote, before it was signed by DeSantis on Tuesday.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.