After a brief debate, the Florida Senate passed SB 1672 to shift homeowners who carry Citizens Property Insurance into non-regulated property insurance plans in an effort to get them out of the state-run company.
The Senate voted 22-16 to send the bill to the House, where a similar proposal was killed last year. Opponents the proposal could mislead homeowners into thinking they are getting the same insurance for less and could cause homeowners, seeking to save money, into out-of-state companies that aren't held accountable in Florida.
Under the bill, SB 1672, unregulated insurance sold by surplus lines carriers would be included in the list of options homeowners can choose from in the state-run clearinghouse when their policy is up for renewal.
These companies would have to offer the same coverage Citizens offers and rates must be 15 percent or but, since surplus lines are not regulated, there is no assurance the rates won’t change.
Sen. Jeremy Ring, D-Margate, said it was “admirable and some would say necessary to try to depopulate citizens insurance,’’ but he warned it will have unintended consequences.
"Surplus lines are not regulated,'' he said. "If they try to get their benefits after a storm, they’re going to have a tough time doing that."
Sen. John Legg, R-New Port Richey, said that the bill will end up providng an unintended "government seal of approval" where people will think “it’s in the clearinghouse so it must be good.”
He said he has seen too often where people with surplus lines coverage have had bad experiences and it "muddies the water for too many of our constitutents.’’
Sen. Wilton Simpson, R-Trilby, said he has more constituents covered by cigtizens “I think surplus lines is a slippery slope and will cause harm to my district.”
Sen. Jeff Clemens, D-Lake Worth, said this will will “absolutely raise rates” for homeowners that choose them and questioned why they are needed. "Either we should have those rules for everybody or we shouldn’t have those rules at all,'' he said.
Sen. David Simmons, R-Altamonte Spring, sponsor of the bill, countered that there are out-of-state surplus lines carriers such as Lloyds of London that are already operating throughout the state and he framed it as a consumer choice issue.
“This does not require anyone to sue a surplus lines carrier at all,’’ he said. “This merely says if you are in the clearninghouse and you can’t get any insurance form an admitted carrier you can -- your option -- select a surplus lines carrier.”
He noted that homeowners that select a surplus lines carrier, they can return to Citizens within three years and pay the renewal reate. He said the requirement includes that the surplus lines carry at least $50 million in surplus and send a disclosure to the policyholder that the surplus lines are not backed.
“We have gone overboard to protect the consumer so that the consumer can make an intelligent decision,’’ he said. He noted that the House bill is “significantly different” and they will ultimately have more negotiations left.