Despite predictions that Florida’s legislative leaders had little interest this year in enacting major insurance reforms, Senate and House bills are headed to the finish line that could affect thousands if not millions of Florida homeowners.

Proposals with a strong chance of survival with just a week remaining in the 2024 legislative session include one that would allow state-owned Citizens Property Insurance Corp. to expand its depopulation program to surplus lines carriers for anyone not living in a “primary home.”

Opponents last week voiced concerns that allowing surplus lines into Citizens takeout program would leave thousands of homeowners at risk of getting nothing if their homes are damaged during a hurricane and their insurer become insolvent.

Surplus lines carriers are insurers whose rates and policy forms are not regulated by the state, and that cover risks that traditional insurers cannot or will not cover. In Florida, homeowners often turn to surplus lines carriers if they cannot find coverage in the traditional market and their homes’ replacement values, in all counties except Monroe and Miami-Dade, exceed Citizens’ $700,000 threshold.

Surplus lines carriers also cover items like yachts, sports stars’ limbs or recording stars’ voices.

Challenging the proposal to open Citizens’ takeout program to surplus lines carriers on Friday, Rep. Hillary Cassel, a Democrat from Broward County, raised concerns that homeowners would be left unprotected by laws that ensure that the Florida Insurance Guaranty Association pays for damages if a home’s regulated insurer goes insolvent.

The bills — House Bill 1503, sponsored by Rep. Rep. Tiffany Esposito, a Lee County Republican, and Senate Bill 1716, sponsored by Sen. Jim Boyd, a Republican representing northern Manatee County and southern Hillsborough County — would enable surplus lines carriers to handpick Citizens properties to take out under Citizens’ depopulation program.

Selected property owners would not be eligible to return to Citizens at their next renewal if they get an offer from a private insurer less that 20% higher than their Citizens renewal cost.

The measure is touted as yet another tool in the state’s effort to reduce the size of Citizens, which last week remained the state’s largest insurer with just under 1.2 million policies.

Snowbirds would be vulnerable

But while supporters say that the proposal would be limited to owners of second homes, Cassel pointed out language that would expose owners who consider Florida their primary residence, but don’t live here long enough to be exempted.

The bill states that any home not occupied for nine months a year, either by the owner or the owner’s tenant, would be eligible for takeout by surplus carriers.

The proposal would apply to single-family homes, condominium units and commercial properties that cover entire condo buildings.

Citizens estimates that 77,000 of its customers would be eligible for takeout under the bill. But Paul Handerhan, president of the Fort Lauderdale-based Federal Association of Insurance Reform, pointed out that there are many more retired “snowbirds” who live here less than nine months a year.

Esposito said the Office of Insurance Regulation would have to approve takeout plans of any surplus lines carrier that wants to participate. In addition, the bill requires the insurer to have at least a financial strength rating of A- rating from ratings agency A.M. Best.

Questioning Esposito on Thursday, Cassel pointed out while the proposal requires rates and terms of the original Citizens policy to remain intact until the policy is scheduled to expire, it does not require OIR approval of the renewal policy. The bill would only require the surplus lines carrier to offer a policy that’s “comparable” to the Citizens policy.

There’s also no provision requiring disputes between homeowners and surplus lines carriers to be resolved in Florida, Cassel said. Surplus lines carriers often require disputes to be settled in their home states, meaning Florida homeowners might have to travel to New York Boston or even London, she said.

Handerhan said allowing surplus lines carriers to take out Citizens policies makes no sense while the state is trying to strengthen the private insurance market. Essentially, the state is allowing surplus carriers to compete directly with regulated carriers that also participate in Citizens’ takeout program, he said.

“Surplus lines carriers have an advantage over (regulated) companies that have to follow all of the state’s insurance laws,” he said.

The bill cleared the House 81-28 on Friday. The Senate did not consider the bill on Friday but is scheduled to reconvene on Monday. If approved, it heads to Gov. Ron DeSantis’ desk.

Flood bill would bar nonrenewals, cancelations

Two other proposals were approved in the House bill on Friday. One would remove a requirement that Citizens customers purchase flood insurance that covers the contents of their homes along with the structures. That requirement, enacted in 2022, was seen as costly and unnecessary since Citizens policies already cover contents of homes.

The second proposal would bar insurers from cancelling or nonrenewing policies of homes damaged by flooding during a hurricane until 90 days after repairs are complete — even though flood damage is typically covered by separate flood insurance policies.

An emergency declaration by the state’s insurance commissioner already bars insurers from canceling policies until the damaged home can be repaired. And for 20 years, insurers didn’t question it, said Kyle Ulrich, president and CEO of the Florida Association of Insurance Agents.

But after Hurricane Ian’s storm surge damaged thousands of homes in Southwest Florida, several insurers took the position that they could cancel policies of flood-damaged homes because their policies did not cover flooding, Ulrich said Friday.

But homes with unrepaired damage cannot buy insurance from any carrier, even Citizens, Ulrich said. “At the end of the day, the most important thing is that these homes have to have some protection and continue to be insured,” he said.

Ulrich voiced doubt that another popular proposal would be enacted this year.

The Senate version of the bill would have raised the cutoff for Citizens eligibility to homes with up to $1 million in replacement value, up from the current $700,000, if the Office of Insurance Regulation finds a lack of private insurance competition in their zip code.

Ulrich said his association has supported increasing eligibility for several years, but state law requires the OIR to study the level of insurance competition on a county by county basis. Currently, only Miami-Dade and Monroe counties have been found to lack competition.

Recent OIR studies did not find that other counties lacked competition, so supporters of the bill thought narrowing the study criteria to zip code areas might help, Ulrich said.

While the measure passed review by two Senate committees, it was left out of the House bill and appears to be dead for this year.

It’s possible that House leaders decided it’s not necessary because depopulation activity and competition by private market insurers are returning to Florida’s marketplace, making Citizens eligibility less important than it was a few years ago, Ulrich said.

“Even we would have to acknowledge the need is less than a couple years ago,” he said.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at rhurtibise@sunsentinel.com.