Gov. Ron DeSantis signed legislation this week that will make it harder for some commercial properties to remain with Citizens Property Insurance Corp. when comparable private coverage is available.
The bill, Senate Bill 1028, is aimed at further reducing the number of policies held by Citizens, the state-created insurer of last resort. Citizens provides coverage for property owners who cannot find insurance in the private market, but state leaders have sought for years to move more policies back to private carriers to limit the state’s exposure after a major storm.
The new law focuses on commercial residential and commercial nonresidential properties. That includes properties such as apartment buildings, condominium association buildings and business properties.
Under the measure, Citizens must create two new commercial insurance clearinghouses by Jan. 1, 2027. One will seek offers from authorized insurers, while the other will seek offers from approved surplus lines insurers, which generally cover risks that are harder to place in the traditional market.
Before Citizens can issue or renew certain commercial policies, those risks will have to go through the clearinghouse process. If an approved surplus lines insurer offers comparable coverage at a total cost no more than 15 percent higher than Citizens, Citizens generally may not issue new coverage.
The law defines total cost broadly, including not only premiums but also fees, taxes, assessments, surcharges and other mandatory charges. It also requires the private offer to be comparable to Citizens coverage, meaning the coverage must be equivalent to or better than what Citizens would provide.
Surplus lines insurers that participate must meet financial standards, including an A.M. Best financial strength rating of at least A- and a financial size category of at least A-VII. Participation by insurers is voluntary.
The bill passed the Senate 33-1 and the House 88-19 before being signed by DeSantis.