Bill to allow unregulated insurance carriers to take over Citizen's property holders clears House

Feb 7, 2012

Some homeowners who have policies with Citizens Property Insurance may suddenly find themselves with a different insurer.  Tom Flanigan reports the Florida House has passed a bill that allows mostly unregulated carriers to take over many of Citizens’ customers.

The bill, sponsored by Republican Representative Jim Boyd of Bradenton, seemed a model of brevity and simplicity.

“This bill is a Citizens depopulation bill by surplus lines carriers with increased solvency standards and that’s the bill, Mr. Speaker.”

Citizens is Citizens Property Insurance, the state run carrier that’s been around since 2002.  It was started as a “carrier of last resort”, but became the “carrier of first resort” in recent years as more and more commercial insurers fled Florida.  As of now, Citizens insures more than one-and-a-third million policyholders.  That concerns lawmakers like Haines City Republican John Wood who doesn’t believe Florida government should be in the insurance business at all.

“We are a long, long way from having a vibrant, healthy market that is not reliant on government.”

What the Boyd bill proposes is to allow what are called “surplus lines” insurance providers to take over some of Citizens’ customers.  The surplus lines business involves agents, usually called “producers”, who are able to obtain coverage from out-of-state insurers that are not licensed in or regulated by the State of Florida.  That situation worries Palm Beach Democrat Jeff Clemons.

“How do these private insurance companies capitalize their dollars?  Where’s that money coming from?  Is it coming from overseas re-insurance firms where there’s thirty of them in one office in some little building in Bermuda and when we have the big event they’re all going to turn around and run and we’re all going to be left holding the bag?

Fellow Democrat Rick Kriseman of St. Petersburg is concerned that Florida has no control over what those companies can charge policyholders.

“Will a surplus lines carrier charge a higher rate than Citizens?  In the first year, doubtful; they want the customer.  But once they have that customer, there is little in this bill that prevents them from increasing premiums by up to a thousand percent if they wanted to in year one, year two, or even in year three.”

St. Augustine Republican Bill Proctor says customers who found themselves switched from Citizens to one a surplus line insurer could always opt to go back.

“There’ll be those people who want suppressed rates through Citizens.  Let them have those suppressed rates and enjoy that benefit and take that gamble.  And then when the storm hits, they’re going to have to pay the assessments because they enjoyed the suppressed rates.”

And the big positive, according to Republican Doug Broxson of Milton, is that the world of commercial insurance will know that Florida is once again, open for business.

“And let’s do the right thing, come to our senses and invite companies to come in and take the policies out of Citizens and get back to the real world.”

That argument carried the day, even though some Republican representatives, mostly from South Florida, sided with Democrats against the bill.  It passed sixty-six to forty-eight and was headed to the senate.