Florida Lawmakers May Allow Takeout Offers to Citizens’ Policyholders

Lawmakers in Florida are moving closer to allowing specific insurer types to make offers to policyholders currently with Citizen’s Property to insure their vacation or second home. 

SB 1716 this week cleared the Senate’s Fiscal Policy Committee for the takeout offers after the Senate’s Banking and Insurance Committee approved the measure earlier this month. 

This bill would allow surplus line insurance companies to make takeout offers to policyholders of Citizen’s who are looking to insure a second or vacation home. 

Citizens, which is the state-run insurer of last resort in Florida, has been working with legislators and private insurance companies to allow insurers to make offers to homeowners. This would result in Citizens (which is now the largest insurer in the state) to shed some policies and the financial exposure to claims from the policies. 

Surplus line insurers are structured differently than traditional insurers and are regulated in a different way. 

“These are companies headquartered and domiciled outside of the United States,” Paula Blanda, a Florida insurance agent known as “The Insurance Lady,” explained in a recent WPTV article. One example of a surplus line insurer is Lloyd’s of London. “We often refer to our excess and surplus companies as the folks who insure when other people won’t,” she added in the article. 

Surplus line companies have been rated and insurance regulators look at how much reinsurance they carry as well as their financial strength. If the bill is eventually approved, it is expected that the number of home eligible for surplus line takeout will be below 100,000. 

The majority of takeout offers will be for single-family homes, but condos may be included. Homeowners can refuse the takeout offer if the offer is 20% higher or more than what the policyholder is currently paying with Citizens.