TALLAHASSEE — For decades, Republican lawmakers and governors have been single-minded when it comes to Floridians with homes insured by the state-run Citizens Property Insurance Corporation: getting rid of those policies.
Recently, they have had a change of heart.
As homeowners continue to struggle to find coverage despite years of reforms, lawmakers this year are moving forward with plans to allow more of them to be covered through Florida law. Insurance of last resort.
A Senate bill would allow homeowners worth more than $700,000 — the current maximum in all but two counties — to get Citizens’ Insurance if they can’t find coverage on the private market.
A House bill would allow citizens to cover housing units in which more than 50% of the units are short-term rentals.
If passed, it would mark a major philosophical shift for Republican lawmakers.
For decades, lawmakers and insurance companies have opposed any measures that would develop citizens, for both philosophical and practical reasons. They said the private market should bear hurricane risks.
Concentrating hurricane risks on the state would put Floridians in trouble. If a large enough storm hits the state and citizens are unable to pay claims, all Floridians with property insurance policies will be subject to contingent assessments.
Lawmakers have taken notice of the shift in allowing more people to qualify for Citizens coverage, including Sen. Jim Boyd, R-Bradenton, who has long been an advocate of “vacuating” company policies.
“We are in extraordinary times right now,” Boyd said Tuesday.
Expand coverage
SB 1106 would allow homes that are entitled to both their dwelling and contents Between $700,000 and $1 million will be covered by citizens if they cannot find coverage in the regular market.
The current cap, in place since 2017, is $700,000. Only residents of Miami-Dade and Monroe counties, where the insurance crisis is more severe, can be covered up to $1 million.
“Ten years ago, a $700,000 house was a mansion, but today it’s just a house,” said Sen. Ed Hooper, R-Clearwater, who is sponsoring the bill.
But the bill makes it more expensive for homeowners in that price range to go with Nationals. Each policyholder will have to pay an additional fee of $2,500 on top of the Citizens policy. The typical citizen cap on price increases will not apply. If they get an offer from a private carrier, the Citizens policyholder will be automatically fired.
“This bill is designed to be an expensive solution,” said Hopper, who said he is considering amending the bill to make it expire in three years.
Mark Friedlander, a spokesman for the industry-backed Insurance Information Institute, said in a statement that the unanimous vote on the bill Tuesday was surprising given the Legislature’s long-standing goal of shrinking the population.
HB 625 would address the lack of wind insurance for residential units, which was exacerbated by the sudden collapse of Surfside’s South Champlain Towers in 2021.
Citizens only offers wind coverage for condo associations where more than 50% of the units are short-term rentals. The bill would remove this restriction.
“We want a healthy free market,” said the bill’s sponsor, Rep. James Buchanan, R-Sarasota. “In the absence of that, we want at least the last scenario opportunity for full coverage.”
Lawmakers on a House committee said Thursday they were hesitant but voted unanimously for it anyway.
“I think we absolutely need to do that,” said Rep. Tom Fabricio, R-Miami. “But I think we need to pay attention to the fact that this is an expansion of citizens, and there will be repercussions in the future, unfortunately.”
Lawmakers did not know how many additional policies the company could take if the bills pass. A Citizens’ spokesman said that the company canceled or did not renew 12,832 policies for exceeding coverage limits between 2021 and 2023. The company is still analyzing the invoices.
Both will need approval from two more committees before reaching their floors for a vote.
“Citizens’ goal”
Citizens’ roots go back to the aftermath of Hurricane Andrew in 1992, when its predecessor was created by lawmakers to offer homeowners insurance to those who couldn’t find it. Mortgage lenders typically require homeowners to do this You have insurance.
Since then, state officials have repeatedly objected to the number of citizen policies and used various methods to reduce their size.
After a series of hurricanes sparked the latest insurance crisis, causing the number of Citizens’ policies to soar to an all-time high of 1.5 million in 2011, then-Gov. Rick Scott used a strong effort to get rid of politics. New companies led by untested CEOs were allowed to take over tens of thousands of citizens’ policies. Many of those companies failed.
In one case, the Citizens Governors Board paid St. Petersburg Property and Casualty Insurance $52 million for 60,000 policies. The company contributed $110,000 to Scott’s re-election campaign.
The number of citizen policies fell to about 420,000 in 2019 before rising to 1.4 million during the current crisis. Lawmakers in 2022 made it easier to remove people from Citizens, requiring policyholders to leave if they receive an offer from a private insurer within 20% of their Citizens policy rate.
Lawmakers have cracked down on lawsuits to try to improve the insurance market, but Floridians are still struggling to find insurance.
“That’s really the goal of the citizens,” said Sen. Doug Broxson, R-Gulf Breeze, a longtime insurance agent. “It’s unfortunate that we have to do this, but people in the state deserve to have coverage.”