Bill could move more homes out of Citizens insurance

TALLAHASSEE – Continuing efforts to shrink the state’s Citizens Property Insurance Corp., the Florida House on Thursday gave final approval to a bill that could lead to at least some second homes moving from Citizens into the private insurance market.

The House unanimously passed the bill (HB 1503), which was approved by the Senate on Wednesday. It is ready to go to Gov. Ron DeSantis.

While the bill deals with a series of issues related to Citizens, much of the focus has been on a “depopulation” program that is designed to shift policies from Citizens into the private market. Currently, the program involves what are known as “admitted” insurance carriers, which face state regulation on issues such as rates.

The bill would open the depopulation program to “surplus lines” carriers, which are not subject to the same regulations as admitted carriers and often insure risky properties. Under the bill, surplus lines carriers would be able to assume policies from Citizens for residences that do not have homestead property-tax exemptions.

An earlier version of the bill drew opposition because it would have allowed surplus lines carriers to assume policies of homes where people live for less than nine months a year. Critics said that could affect Florida residents who live only part-time in the state – and lead to them having coverage that lacks the regulatory protections of policies with admitted carriers.

But the Senate changed the bill to exempt residences with homestead exemptions from the possibility of being assumed by surplus lines carriers. Rep. Hillary Cassel, a Dania Beach Democrat who was a vocal opponent of the earlier version, supported the bill Thursday after the homestead change.

“At the end of the day, we all agree that we really need to take action and depopulate Citizens, but that doesn’t need to come at the cost of Floridians,” Cassel said. “I still don’t necessarily think surplus lines is the best option because of some of the things that I mentioned in debate (about the earlier version) as far as the lack of oversight with OIR (the state Office of Insurance Regulation). But at the end of the day, this bill, this amendment now protects Floridians from this and ensures that people that have homestead properties will not be available to be in that surplus lines market.”

The bill, sponsored by Rep. Tiffany Esposito, R-Fort Myers, tries to build in some safeguards. For example, surplus lines carriers would need to have financial-strength ratings of at least A- from AM Best to participate in the depopulation program.

Citizens has grown during the past three years to become the state’s largest property insurer as private carriers dropped customers and raised rates because of financial problems. Citizens had 1.171 million policies as of last week, according to data on its website.

It reached as many as 1.412 million policies in fall 2023 before seeing decreases because of the depopulation program. But state leaders have long argued it needs to be significantly smaller, at least in part because of financial risks if a major hurricane or multiple hurricanes hit the state.

Nevertheless, proposals were filed for this year’s legislative session that could have added policies to Citizens. Those proposals included the possibility of residents with homes valued at more than $700,000 getting coverage from Citizens.

Citizens is barred from selling policies for homes with a “dwelling replacement cost” of $700,000 or more, except in Miami-Dade and Monroe counties, where the limit is $1 million. With the legislative session scheduled to end Friday, the proposals that could have changed the $700,000 limit in other parts of the state likely will not pass.