Surplus Lines Depopulation Bill Stalls
A proposal to allow surplus lines insurers to remove policies from Citizens Property Insurance Corporation failed in the waning days of the session. Lawmakers considered ways of reducing the size of Citizens, and one proposal that emerged was to allow surplus lines insurers to assume policies from Citizens using a process similar to that used by admitted insurers. The bill sought to protect consumers by placing restrictions on the insurers seeking to assume these policies.
Some legislators objected to the proposal, expressing concerns that surplus lines insurers are not regulated and therefore wouldn’t be subject to the continuing regulatory oversight that insurer admitted insurers assuming policies from Citizens.
A typical assumption program results in policyholders’ being assumed by an insurer unless the policyholders “opt out” of the process. Opponents of the surplus lines proposal were successful in amending it so the process for those insurers would be an “opt in.” This rendered the process impractical and ineffective, killing the premise behind the bill. Supporters ultimately were not able to pass a more favorable version of the bill and it died in the session’s final days.
Proposals that would make surplus lines insurers part of the Citizens solution likely will always be the subject of concern for some admitted insurers and for consumer groups alike. However, the larger concern for the health of the Florida residential property insurance market is lawmakers’ continuing unwillingness to solve concerns with Citizens’ rate inadequacy and consequently the continued reliance on potentially large multi-year assessments (taxes) on all Floridians as a funding source.