Citizens Property Insurance Corporation undergoes legislative revamp

by | May 13, 2024

Gov. Ron DeSantis signed legislation on Friday that introduces changes to Citizens Property Insurance Corporation by allowing surplus lines insurers to take over certain policies, simplifying flood insurance requirements, and consolidating accounts to improve financial stability and reduce reliance on the state’s insurer of last resort.

Gov. Ron DeSantis signed legislation on Friday that introduces changes to the operations and management of Citizens Property Insurance Corporation, the state’s insurer of last resort.

The new legislation permits surplus lines insurers to assume policies from Citizens for non-primary residences and properties not used as homesteads, provided they meet certain financial criteria and receive rate approval from the Office of Insurance Regulation (OIR). In theory, the move aims to transfer more policies to the private market, thereby reducing the burden on Citizens.

“Citizens’ rate cap, also known as the “glidepath,” is not closing the gap between Citizens rates and private market rates,” a legislative analysis states. “Instead, because of the rate cap and the increasing rates of private property insurance, the gap is growing and making Citizens more like a competitor to private insurers than an insurer of last resort. Because Citizens’ rates are often well below those of private carriers, Citizens may be more competitive than otherwise intended.”

Effective immediately, the law further stipulates that Citizens’ policyholders who are required to purchase flood insurance to be eligible for coverage need only obtain dwelling coverage, not contents coverage. This change addresses rising premiums associated with the inclusion of contents coverage under the National Flood Insurance Program’s (NFIP) Risk Rating 2.0 pricing system.

Additionally, the law consolidates Citizens’ three separate accounts—Personal Lines Account, Commercial Lines Account, and Coastal Account—into a single account as of January 1, 2024. This consolidation enables Citizens to utilize its entire surplus to pay claims, providing more leeway to ensure its financial stability and operational efficiency.

The bill also allows Citizens’ executive director to appoint a designee to act as the agency head and permits Citizens to share information with the National Insurance Crime Bureau (NICB). Moreover, Citizens is now authorized to obtain and enforce patents, copyrights, and trademarks.

The bill passed the House with unanimous support on March 1, 2024, and was amended and approved by the Senate on March 6, 2024. The House concurred with the Senate’s amendments, passing the final version on March 7, 2024.


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