What's Happening?
Florida Governor Ron DeSantis has signed Senate Bill 1028, which mandates the creation of a commercial clearinghouse for Citizens Property Insurance policies. This bill, introduced by state Senator Joe Gruters, aims to facilitate the depopulation of the commercial side
of Citizens, the state’s insurer of last resort. The bill allows surplus lines insurers to be considered for Citizens’ takeouts, provided they have a strong financial strength rating. Despite its passage, the bill has faced criticism from brokers and agents who deem it unnecessary and potentially beneficial to a major brokerage, Ryan Turner, whose CEO has been a significant contributor to Republican causes. The bill omits certain safeguards, such as conflict of interest clauses and requirements for the program manager to be based in Florida. The Florida Office of Insurance Regulation has three months to review the program.
Why It's Important?
The signing of this bill is significant as it reflects ongoing efforts to reform Florida's insurance market, which has been under strain due to high litigation costs and natural disasters. By creating a commercial clearinghouse, the state aims to reduce the number of policies held by Citizens, thereby decreasing the financial risk to the state. However, the bill's critics argue that it may not be necessary given the recent decline in Citizens' policy count, attributed to previous legislative reforms and the entry of new insurers into the market. The bill's potential favoritism towards a specific brokerage raises concerns about fairness and transparency in the insurance industry.
What's Next?
The Florida Office of Insurance Regulation will review the commercial clearinghouse program over the next three months. Stakeholders, including insurance agents and brokers, may continue to voice their concerns about the bill's implications and its impact on the market. The effectiveness of the clearinghouse in reducing Citizens' policy count and its influence on the broader insurance landscape in Florida will be closely monitored.
