News & Updates


Legislature Sends Large Insurer Rate Deregulation Bill to Governor

By: Travis Miller

A legislature known for adopting lengthy bills that pervade most aspects of the business might have caused its greatest stir with the simple six-page HB 1171. The bill, which passed late on the last day of session, would exempt large insurers from key provisions of Florida’s rating law.

Results of the Bill:

The bill would allow certain large insurers to charge rates for residential property insurance in excess of their filed and approved rates. The insurer would be required to submit its excess rates to the Office of Insurance Regulation, but the OIR’s review would be limited to determining adequacy or whether the rates use unlawful rating factors. The legislature chose to limit the benefits of the bill to insurers with:

  • $500 million in surplus;
  • $200 million in surplus with a net writings ratio not exceeding 2:1, as long as reinsurance used in maintaining the ratio is provided by reinsurers rated superior, excellent, exceptional or similarly by recognized rating organizations;
  • $150 million in surplus and having a primary purpose of providing insurance to members of a nonprofit organization.

An insurer seeking to avail itself of the new rating flexibility cannot purchase TICL coverage from the FHCF. In addition, the insurer will be required to notify each affected policyholder that the rate being charged may exceed its filed rate and obtain a signed acknowledgment. The insurer also will be required to provide a premium quote from Citizens Property Insurance Corporation or an admitted insurer willing to write the policy.

Notwithstanding the provisions of Section 627.4133 relating to cancellations and nonrenewals, an insurer canceling or nonrewing a policy subject to excess rates will be required to give 180 days notice.

Benefits and Drawbacks:

The bill marks the first meaningful effort by the Florida Legislature in recent years to grant rate flexibility to insurers, thereby potentially attracting capital and allowing insurers to timely respond to market conditions. The bill also seeks to attract financially strong insurers and therefore increase competition.

On the other hand, according to legislators during floor debate, the bill benefits only about 15 insurers. Other insurers with strong credentials might fall outside of the bill’s thresholds and therefore not be able to avail themselves of the statute’s benefits. Also, small insurers arguably need at least as much pricing flexibility, if not more so, than insurers with large surpluses. The bill, if it becomes law, would limit the ability to raise rates only to insurers that might have the greatest need to do so. Floor debate on this bill also revealed concerns among some legislators that it will result in growth for 

Citizens Property Insurance Corporation, particularly in the state’s areas of greatest coastal exposure where legislators perceive that the large insurer’s rate increases will be the largest.

The Bill’s Future:

The bill next will be presented to the Governor. Some predict the Governor will veto the bill. However, many observers also have been predicting throughout the 60-day session that the bill would not pass. This bill undoubtedly will attract a lot of attention in the coming weeks as the Governor considers it.