Fla. Senate Panel Votes to Raise Citizens’ Policy Cap to $1M, End Glidepath for Some

The Florida Senate’s Banking and Insurance Committee on Tuesday approved a bill that would make the state-backed Citizens Property Insurance Corp. more like an insurer of last resort, unrestricted by premium caps – at least for some expensive homes in the state.

By a unanimous vote, the committee endorsed Senate Bill 1106, which would raise the policy limit on homes that can be insured by Citizens, from $700,000 to $1 million. The bill, sponsored by state Sen. Ed Hooper, R-Palm Harbor, also would do away with the glidepath, which has limited Citizens’ premium increases to no more than 15% per year, for homes and condominium units in that value range. It would also place a surcharge on the policies of $2,500 or 25% of the premium and require actuarily sound rates.

Senators said the idea is to provide an option for some affluent homeowners who have been unable to find affordable coverage in the primary market in Florida’s distressed insurance environment. Since 2014, state law has placed a $700,000 policy limit on Citizens, except in Monroe County, home of the Florida Keys, and Miami-Dade County.

“If you’ve looked at buying a house, you know that $700,000 is not a mansion,” Hooper said at the committee meeting. “It’s almost the median price of housing.”

Committee member Doug Broxson, R-Milton, told of one Florida homeowner who could not find coverage for a $1 million home, except in the surplus lines market. His premium jumped from $8,000 to $38,000. Broxson said the current state of the Florida market has created a “doughnut hole,” in which lower-priced and more-expensive homes can find reasonable coverage, but those in semi-pricey category cannot.

“This is really the purpose of Citizens,” Broxson said. “Citizens is the company of last resort.”

Florida lawmakers in the last 18 months have approved sweeping legislation that aims to curtail claims litigation, something insurers have decried as the driving force behind soaring loss expenses and premiums. But those reforms could take another year or two to stabilize rates, and officials are under increasing pressure from property owners to take further action this year to stem rate hikes.

Sen. Jim Boyd, chair of the committee, said he was reluctant to endorse a plan that would shunt more policyholders to Citizens. Such a move could make Citizens compete with primary carriers and would elevate the risk of an assessment on Florida policyholders in the event of a major catastrophe in the state.

“But these are unusual times,” Boyd said at the meeting. “The market is starting to respond, but it’s still a ways off. There are certain things the Legislature needs to do now.”

A representative of the Florida Association of Insurance Agents signaled at the meeting that the group supports the bill. But others at the hearing spoke out against it. Gary Rosen, a building and mold-remediation contractor, argued that Citizens does not need to raise premiums and surcharges. Instead, the corporation should ensure that contractors’ restoration work is fully inspected, which would help prevent lawsuits by homeowners and reduce costs for the insurer.

Robert Reyes, who represents Monroe County, testified that the proposed $2,500 surcharge on policies for pricey houses would be unfair to homeowners already are struggling to find affordable insurance. The median home price in Monroe County late last year was $1.4 million. Statewide, the median price was about $403,000, according to Redfin and Houzeo real estate tracking sites.

To be presented to the governor, SB 1106 must be considered by two other Senate committees, the full Senate and the House of Representatives before the 2024 session ends March 8. If signed into law, the measure would take effect Aug. 1 of this year.

The bill can be seen here. A late amendment to the bill, approved by the committee, is here.

Top photo: Sen. Broxson at the committee meeting Tuesday. (The Florida Channel)

Topics Florida Funding Politics