The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Appropriations Subcommittee on Agriculture, Environment, and General
Government
BILL: PCS/CS/SB 186 (804270)
INTRODUCER: Appropriations Subcommittee on Agriculture, Environment, and General Government;
Banking and Insurance Committee; and Senator Brandes
SUBJECT: Citizens Property Insurance Corporation
DATE: February 18, 2022 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Schrader Knudson BI Fav/CS
2. Sanders Betta AEG Recommend: Fav/CS
3. AP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
PCS/CS/SB 186 revises Citizens Property Insurance Corporation (Citizens or corporation)
eligibility criteria, rates, assessment surcharges on Citizens’ policyholders, depopulation
programs, producing agent commissions, and confidentiality exceptions for underwriting and
claim files.
The bill makes it a requirement, rather than an option, that Citizens Property Insurance
Corporation merge their Personal Lines, Commercial Lines, and Coastal Accounts if financing
obligations entered into by the Florida Windstorm Underwriting Association or Residential
Property and Casualty Joint Underwriting Association are no longer outstanding.
The bill provides Citizens residential policyholders are ineligible for renewal with Citizens if an
offer of coverage is received from an authorized insurer, unless that offer presents a premium
that is more than 20 percent greater than the Citizens renewal premium for comparable coverage.
Under current law, Citizens policyholders remain eligible unless they receive an offer of
comparable coverage which has a premium of less than the Citizens renewal premium.
The bill increases the maximum surcharge that may be levied on Citizens’ policyholders if
Citizens projects a deficit in one of its accounts to: 20 percent of premium if Citizens has
one million policyholders but less than 1.5 million policyholders; and 25 percent of premium if
BILL: PCS/CS/SB 186 (804270) Page 2
Citizens has 1.5 million policyholders or more. The surcharge may be levied for each of
Citizens’ three accounts.
The bill provides that when Citizens assumes a policy from an unsound insurer, the premium
shall be the higher of the last premium amount charged by the unsound insurer to the
policyholder or the premium that would be normally charged by Citizens to carry said risk. If an
unsound insurer’s premium is applied to the policy, that premium would remain in place
unchanged until the rate for Citizens, that would be normally applicable, exceeds the amount last
charged by the unsound insurer.
The bill authorizes surplus lines insurers to participate in Citizens’ depopulation, take-out, and
keep-out plans if Citizens’ policy count exceeds 700,000 policies. Citizens policy count was
759,305 policies as of December 31, 2021. The surplus lines insurer must: meet financial
requirements; provide notice to the policyholder which outlines any coverage differences and
explain surplus lines policies are not covered by the Florida Insurance Guaranty Association; and
provide coverage similar to that provided by Citizens. A risk with a personal residential dwelling
replacement cost or a single condominium unit with a combined dwelling and contents
replacement cost that is less than $700,000, remains eligible for Citizens regardless of receipt of
an offer of comparable coverage from a surplus lines insurer. If such risk has a replacement cost
of $700,000 or more, however, the risk is ineligible for Citizens coverage upon receiving an offer
of comparable coverage from a surplus lines insurer that is not greater than the premium for
Citizens coverage.
The bill also:
Defines “primary residence” and revises the application of the Citizens’ rate increase
restriction glide path to only apply to personal lines residential policies covering a
policyholder’s primary residence and single commercial lines residential policies;
Revises confidentiality exceptions for Citizens’ underwriting and confidential claim files;
Limits the commissions Citizens may pay to producing agents; and
Makes technical changes to section 627.3517, Florida Statutes, and reenacts and makes
conforming changes to section 627.3518, Florida Statutes.
The bill has an indeterminate fiscal impact to state revenues and expenditures. See Section V.
Fiscal Impact Statement.
The bill takes effect January 1, 2023.
II. Present Situation:
Citizens Property Insurance Corporation—Overview
Citizens Property Insurance Corporation (Citizens or corporation) is a state-created, not-for-
profit, tax-exempt governmental entity whose public purpose is to provide property insurance
coverage to those unable to find affordable coverage in the voluntary admitted market.1 Citizens
1
Admitted market means insurance companies licensed to transact insurance in Florida.
BILL: PCS/CS/SB 186 (804270) Page 3
is not a private insurance company.2 Citizens was statutorily created in 2002 when the Florida
Legislature combined the state’s two insurers of last resort, the Florida Residential Property and
Casualty Joint Underwriting Association (RPCJUA) and the Florida Windstorm Underwriting
Association (FWUA). Citizens operates in accordance with the provisions in s. 627.351(6), F.S.,
and is governed by an eight member Board of Governors that administers its Plan of Operations.
The Plan of Operations is reviewed and approved by the Financial Services Commission.3 The
Governor, President of the Senate, Speaker of the House of Representatives, and Chief Financial
Officer each appoints two members to the board.4 Citizens is subject to regulation by the Florida
Office of Insurance Regulation (OIR).
Citizens has three different accounts through which it offers property insurance: a personal lines
account, a commercial lines account, and a coastal account.
Citizens’ Accounts
The Personal Lines Account (PLA) offers personal lines residential policies that provide
comprehensive, multi-peril coverage statewide, except for those areas contained in the Coastal
Account. The PLA also writes policies that exclude coverage for wind in areas contained within
the Coastal Account. Personal lines residential coverage consists of the types of coverage
provided to homeowners, mobile home owners, dwellings, tenants, and condominium unit
owner’s policies.5
The Commercial Lines Account (CLA) offers commercial lines residential and non-residential
policies that provide basic perils coverage statewide, except for those areas contained in the
Coastal Account. The CLA also writes policies that exclude coverage for wind in areas contained
within the Coastal Account. Commercial lines coverage includes commercial residential policies
covering condominium associations, homeowners’ associations, and apartment buildings. The
coverage also includes commercial non-residential policies covering business properties.6
The Coastal Account offers personal residential, commercial residential, and commercial non-
residential policies in coastal areas of the state. Citizens must offer policies that solely cover the
peril of wind (wind only policies) and may offer multi-peril policies.7
The Citizens policyholder eligibility clearinghouse program was established by the Legislature in
2013.8 Under the program, new and renewal policies for Citizens are placed into the
clearinghouse where participating private insurers can review and decide to make offers of
coverage before policies are placed or renewed with Citizens.9
2
Section 627.351(6)(a)1., F.S.
3
Section 627.351(6)(a)2., F.S.
4
Section 627.351(6)(c)4.a., F.S.
5
See s. 627.351(6)(b)2.a., F.S., and Account History and Characteristics, Citizens Property Insurance Corporation,
https://www.citizensfla.com/documents/20702/1183352/20160315+05A+Citizens+Account+History.pdf/31f51358-7105-
40e9-aa75-597f51a99563 (March 2016) (last visited Jan. 22, 2022).
6
Id.
7
Id.
8
Section 10, ch. 2013-60, L.O.F.
9
Section 627.3518(2)-(3), F.S.
BILL: PCS/CS/SB 186 (804270) Page 4
Current Policies
As of December 31, 2021, Citizens reports 759,305 policies in-force with a total exposure of
$232,502,323,529.10 The below chart outlines Citizens account and product type, number of
policies in-force, total exposure and premium with surcharges.
Policies In- Premium with
Account Product Line Total Exposure
Force Surcharges
PLA Personal Residential Multiperil (PR-M) 589,028 167,886,789,888 1,280,496,248
Coastal Personal Residential Multiperil (PR-M) 98,105 23,245,226,192 278,331,349
Coastal Personal Residential Wind-Only (PR- 67,342 28,784,726,623 178,916,825
W)
Coastal Commercial Residential Multiperil 111 592,392,383 2,789,952
(CR-M)
Coastal Commercial Residential Wind-Only 1,749 5,682,636,307 33,449,678
(CR-W)
Coastal Commercial Non-Residential Multiperil 39 48,588,500 569,765
(CNR-M)
Coastal Commercial Non-Residential Wind- 2,212 1,837,291,826 23,692,614
Only (CNR-W)
CLA Commercial Residential Multiperil 580 4,289,395,010 17,091,136
(CR-M)
CLA Commercial Non-Residential Multiperil 139 135,276,800 879,248
(CNR-M)
Total 759,305 232,502,323,529 1,816,216,815
Source: Citizens Property Insurance11
These numbers do not reflect policies tagged for takeout via Citizens’ depopulation program but
still serviced by Citizens.12 From December 2020 to December 2021, Citizens’ policy count
grew by nearly 40 percent, adding 216,566 total policies in force.13 Citizens has expressed that it
expects to exceed one million policies in force in 2022.14
Citizens Glide Path Rates
From 2007 until 2010, Citizens’ rates were frozen by statute at the level that had been
established in 2006. In 2010, the Legislature established a “glide path” to impose annual rate
increases up to a level that is actuarially sound. Under the originally established glide path,
Citizens had to implement an annual rate increase which, except for sinkhole coverage, does not
exceed 10 percent above the previous year for any individual policyholder, adjusted for coverage
10
Citizens Property Insurance, About Us, Snapshot, December 31, 2021, https://www.citizensfla.com/-/20211231-policies-in-
force (last visited Jan. 22, 2022).
11
Id. This table does not include policies tagged for takeout via the Depopulation Program but still serviced by Citizens.
12
Id.
13
Citizens Property Insurance Corporation, Policies in Force, https://www.citizensfla.com/policies-in-force (last visited
Jan. 22, 2022).
14
Citizens Property Insurance Corporation, Press Release: Citizens Board approves 2022 rate recommendations
(December 15, 2021), available at https://www.citizensfla.com/-/20211215-citizens-board-approves-2022-rate-
recommendations.
BILL: PCS/CS/SB 186 (804270) Page 5
changes and surcharges. In 2021, the Legislature revised this glide path to increase it one percent
per year to 15 percent, as follows: 15
11 percent for 2022.
12 percent for 2023.
13 percent for 2024.
14 percent for 2025.
15 percent for 2026 and all subsequent years.
The implementation of this increase ceases when Citizens has achieved actuarially sound rates.16
In addition to the overall glide path rate increase, Citizens can increase its rates to recover the
additional reimbursement premium it incurs as a result of the annual cash build-up factor added
to the price of the mandatory layer of the Florida Hurricane Catastrophe Fund coverage, pursuant
to s. 215.555(5)(b), F.S.17
Citizens Financial Resources
Citizens’ financial resources include insurance premiums, investment income, and operating
surplus from prior years, Florida Hurricane Catastrophe Fund (FHCF) reimbursements, private
reinsurance, policyholder surcharges, and regular and emergency assessments. Non-weather
water losses, reinsurance costs and litigation are currently the major determinants of insurance
rates.18 In the event of a catastrophic storm or series of smaller storms, reserves could be
exhausted, leaving Citizens unable to pay all claims.19 Under Florida law, if the Citizens’ Board
of Directors determines a Citizens’ account has a projected deficit, Citizens is authorized to levy
assessments20 on its policyholders and on each line of property and casualty line of business
other than workers’ compensation insurance and medical malpractice insurance.21 Citizens may
impose three assessment tiers and their sequence is as follows:22
Citizens Policyholder Surcharge – A surcharge of up to 15 percent of premium on all Citizens’
policies, collected upon issuance or renewal. This 15 percent assessment can be levied for each
of the three Citizens’ accounts—the CLA, the PLA, and the Coastal Account— that project a
deficit. Thus, the total maximum premium surcharge a policyholder could be assessed is
45 percent.23
15 Section 627.351(6)(n)5., F.S.
16
Section 627.351(6)(n)7., F.S.
17
Section 627.351(6)(n)6., F.S.
18
Citizens Property Insurance Corporation, 2022 Rate Kit, Citizens 2021 Rates, Frequently Asked Questions,
https://www.citizensfla.com/documents/20702/15725518/20211213+2022+Rate+Kit.pdf/328181e5-1c41-a28d-76ea-
b7d911462c6a?t=1639433573548 (last visited Jan. 22, 2022).
19
Citizens Property Insurance Corporation, Insurance/Insurance 101/Assessments, https://www.citizensfla.com/assessments
(last visited Jan. 22, 2022).
20
Assessments are charges that Citizens and non-Citizens policyholders can be required to pay, in addition to their regular
policy premiums.
21
Accident and health insurance and policies written under the National Flood Insurance Program or the Federal Crop
Insurance Program are not assessable types of property and casualty insurance. Surplus lines insurers are not assessable, but
their policyholders are. Section 627.351(6)(b)3.f.-h., F.S.
22
Citizens Property Insurance Corporation, supra note 19.
23
Sections 627.351.(6)(b)3.i.(I) and 627.351.(6)(c)21., F.S. See also, Citizens Property Insurance Corporation, supra note 19.
BILL: PCS/CS/SB 186 (804270) Page 6
Regular Assessment – If the Citizens’ surcharge is insufficient to cure the deficit for the coastal
account, Citizens can require an assessment against all other insurers except medical malpractice
and workers’ compensation. The assessment may be recouped from policyholders through a rate
filing process of up to two percent of premium or two percent of the deficit, whichever is
greater.24 This assessment is not levied against Citizens’ policyholders.
Emergency Assessment – Requires any remaining deficit for Citizens’ three accounts be funded
by multi-year emergency assessments on all insurance policyholders (except medical malpractice
and workers’ compensation), including Citizens’ policyholders. This assessment may not exceed
the greater of 10 percent of the amount needed to cover the deficit, plus interest, fees,
commissions, required reserves, and other costs associated with financing the original deficit, or
10 percent of the aggregate statewide direct written premium for subject lines of business and all
accounts of the corporation for the prior ye