The House approved a measure sponsored by Sarasota Republican Sen. Joe Gruters aimed at shifting more commercial properties out of the state-run Citizens Property Insurance Corporation and into the private market, sending the measure to Gov. Ron DeSantis for final approval.

Representatives voted 88-19 in favor of SB 1028 as sponsored by Gruters in the Senate without changes. The bill would expand the state’s insurance clearinghouse system and establish new requirements meant to steer certain commercial policyholders toward private insurers. Miami Republican Rep. Mike Redondo, who sponsored a similar bill (HB 943) in the House, told lawmakers Monday the proposal is intended to return Citizens to its role as an insurer of last resort while reducing taxpayer exposure tied to major storm losses.

The change is part of longtime efforts to shrink Citizens Insurance exposure to liabilities during major storms dating back to 2014. Citizens was originally designed as an insurer of last resort but has seen enrollment surge during Florida’s property insurance crisis.

Under the legislation, Citizens would be prohibited from issuing new coverage for commercial residential or commercial nonresidential risks if a surplus lines clearinghouse insurer offers comparable coverage and the total cost of that coverage is within 15% of the Citizens policy. That threshold is stricter than the 20% benchmark used in the personal lines market.

The measure also requires Citizens to establish separate clearinghouses for commercial lines coverage — one for authorized insurers and another for surplus lines carriers — to increase opportunities for private insurers to assume policies that might otherwise remain with the state-backed insurer. Under the process laid out in the bill, commercial applications would first go through the authorized-insurer clearinghouse, and if no comparable offer is made within five days at or below the eligibility threshold, the risk could then move to the surplus-lines clearinghouse.

Redondo told lawmakers the bill creates more of a “keep-out” mechanism than a “take-out” process, meaning it is designed to prevent some new or renewing commercial risks from entering or staying with Citizens when qualifying private-market coverage is available, rather than pulling policies out midterm. He also said the measure applies to commercial policies such as condominium association master policies, not individual condo owners’ personal residential coverage.

Redondo said about 3,000 commercial policies in Citizens could potentially be eligible for the commercial clearinghouse, representing roughly $25 billion in exposure, and argued lawmakers should continue trying to move as much of that risk as possible into the private market. Opponents raised concerns about pushing policyholders into the surplus-lines market, where rates, forms and fees are generally not regulated in the same way as admitted-market products. Redondo argued that the bill requires coverage to be “equal or better” than Citizens’ coverage and said the Office of Insurance Regulation would have extensive oversight over the program and its approval process.

The bill also revises how insurers and agents interact with the clearinghouse system, outlines commission requirements for agents placing policies through the program, and establishes procedures for sharing risk information with clearinghouse administrators. It requires Citizens to select commercial clearinghouse administrators within 90 days after the act takes effect, and requires the Office of Insurance Regulation to review and approve the program within three months after the measure becomes law.

Because the House passed the Senate version without amendments, the bill now heads to the Governor’s office for final approval. If signed, it would take effect upon becoming law.