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 Committee on Appropriations
BILL: CS/CS/SB 1728
INTRODUCER: Appropriations Committee (Recommended by Appropriations Subcommittee on
Agriculture, Environment, and General Government); Banking and Insurance
Committee; and Senator Boyd
SUBJECT: Property Insurance
DATE: March 2, 2022 REVISED: 3/3/22
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Arnold/Knudson Knudson BI Fav/CS
2. Sanders Betta AEG Recommend: Fav/CS
3. Sanders/Knudson Sadberry AP Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 1728 addresses contractor solicitations related to property insurance roof claims, the
application of a separate roof deductible for roof losses to residential property, and various
aspects of Citizens Property Insurance Corporation (Citizens or corporation).
Contractor Advertisement Related to Property Insurance Claims for Roof Damage
The bill allows contractors to make written or electronic communications that encourage,
instruct, or induce a consumer to contact a contractor or public adjuster for the purpose of
making an insurance claim for roof damage if such communication includes the following
disclosures:
 The consumer is responsible for payment of any insurance deductible;
 It is insurance fraud punishable as a felony of the third degree for a contractor to pay, waive,
or rebate all or part of an insurance deductible applicable to payment to the contractor for
repairs to property covered by a property insurance policy; and
 It is insurance fraud punishable as a felony of the third degree to intentionally file an
insurance claim containing any false, incomplete or misleading information.
The disclosures must be stated in a font size that is at least 12 points and at least half as large as
the largest font used in the solicitation. With this change, contractors will no longer be prohibited
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from making such solicitations so long as the solicitation includes the aforementioned
disclosures.
Separate Roof Deductible
The bill allows property insurers to require a separate roof deductible as a condition of eligibility
or renewal of a residential property insurance policy, if all of the following conditions are met:
 The roof deductible may not exceed two percent of the policy’s dwelling coverage limit.
 The premium for such coverage includes an actuarially sound premium discount or credit for
the impact of the roof deductible.
 If the roof deductible is added to the policy at renewal, the insurer must provide a notice of
change in policy terms pursuant to section 627.43141, Florida Statutes.
 The roof deductible does not apply to:
o A total loss to a primary structure in accordance with the valued policy law;
o Under section 627.702, Florida Statutes, which is caused by a covered peril;
o A roof loss caused by a hurricane as defined by section 627.4025(2), Florida Statutes; or
o A roof loss that can be repaired without replacement of the roof.
 If a roof deductible is applied, no other policy deductible may be applied to the loss. If,
however, a roof deductible is not applied, the all-other-perils deductible or the hurricane
deductible may be applied.
The bill specifies that a roof deductible provision may only be included in an insurance policy if
the OIR determines the deductible provisions of the policy are clear and unambiguous. The bill
also requires that any personal lines residential property insurance policy that contains a separate
roof deductible must include the following disclosure in at least 18-point, boldfaced type: THIS
POLICY CONTAINS A SEPARATE DEDUCTILE FOR ROOF LOSSES WHICH MAY
RSULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU. The policy must also prominently
display the actual dollar value of the roof deductible on the policy declarations page at issuance,
and for renewal, on the renewal declarations page or the premium renewal notice.
The bill allows residential property insurers that utilize a roof deductible to provide only actual
cash value reimbursement on a roof loss until the insurer receives reasonable proof of payment
by the policyholder of the roof deductible.
Citizens Property Insurance Corporation (Citizens)
The bill makes it a requirement, rather than an option, that Citizens 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 requires certain appointed members of the Citizens Board of Governors (board) to have
demonstrated expertise in insurance at the time of appointment or reappointment. The bill
requires that on or after July 1, 2022, an appointee designated as chair must have demonstrated
expertise in insurance or must have at least one experience serving on the board. The bill revises
the term “demonstrated expertise in insurance” to mean at least ten years’ experience:
BILL: CS/CS/SB 1728 Page 3
 In property and casualty insurance as a full time employee, officer, or owner of a licensed
insurance agency or an insurer authorized to transact property insurance in this state; or
 As an insurer regulator or as an executive or officer of an insurance trade association.
The bill also requires that the Citizens executive director must, at the time of appointment, have
the experience, character and qualifications necessary to serve in that role for an insurer that has
a certificate of authority to transact insurance in Florida.
The bill limits the application of the Citizens “glidepath” to personal lines residential policies
covering an insured’s primary residence and any commercial lines residential policy.
“Glidepath” is the term commonly used to refer to the statutory limitation on rate increases that
may be imposed on an individual Citizens policyholder. The maximum rate increase that may be
imposed on any single policy, excluding coverage changes and surcharges, is 11 percent for
2022.1 Other properties would be charged the actuarially indicated rate.
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 provides whenever an offer is received by a Citizens personal or commercial lines
residential policyholder, the risk is not eligible for Citizens coverage unless the premium for
coverage from the authorized insurer is more than 20 percent greater than the renewal premium
for comparable coverage from Citizens. The bill also applies the 20 percent standard to new
applicants for Citizens commercial lines residential coverage. Under current law, Citizens
policyholders remain eligible for coverage unless the offer from an authorized insurer is less than
the policyholder’s Citizens renewal premium.
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.
1
The maximum rate increase will increase by one percent for each subsequent year until it reaches 15 percent for 2026.
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Notice of Intent to Initiate Litigation
The bill allows a defendant to recover reasonable attorney fees and costs if a claimant’s suit
against the defendant is dismissed for failure to submit a notice of intent to initiate litigation
The bill has an indeterminate fiscal impact to state revenues and expenditures. See Section V.
Fiscal Impact Statement.
The bill has an effective date of July 1, 2022.
II. Present Situation:
Florida Residential Property Insurance Market Data and CS/CS/CS/SB 76 (2021)
According to the Florida Office of Insurance Regulation (OIR), from 2017 through the second
quarter of 2021, Florida domestic property insurers had cumulative net underwriting losses that
resulted in a cumulative net income in excess of negative one billion dollars.2
Prior to the 2021 Legislative Session, the OIR reported an increasing trend of domestic property
insurers filing for rate increases. Insurers submitted 105 rate filings in 2020 for increases of
10 percent or more, with the OIR approving 55 of those filings. In 2016, the OIR approved only
six rate increases of at least 10 percent.3
In a presentation to the Florida Senate Committee on Banking and Insurance on January 12,
2021, the State Insurance Commissioner attributed the net underwriting losses, combined ratios,
and resulting rate increases displayed above to several related trends and behaviors present in
Florida’s domestic property insurance market:
 Claims with litigation;
 Claims solicitation; and
 Adverse loss reserve development.4
In 2020, the OIR conducted a data call of Florida’s domestic property insurers.5 According to the
State Insurance Commissioner, the results of the data call showed the severity of non-weather
water claims with litigation is nearly double that of the claims that are closed without litigation.6
2
David Altmaier, Florida Office of Insurance Regulation, Overview of the Florida Insurance Market, pg. 6 (Sept. 22, 2021).
https://www.flsenate.gov/Committees/Show/BI/MeetingPacket/5252/9419_MeetingPacket_5252_2.pdf (last accessed
Jan. 30, 2022).
3
Florida Senate, Meeting of the Committee on Banking and Insurance (Jan. 12, 2021) (statement of David Altmaier,
Commissioner, Florida Office of Insurance Regulation).
4
Florida Senate, Meeting of the Committee on Banking and Insurance (Jan. 12, 2021) (statement of David Altmaier,
Commissioner, Florida Office of Insurance Regulation).
5
https://www.floir.com/Sections/PandC/AssignmentofBenefits.aspx (last visited Jan. 27, 2021).
6
Florida Senate, Meeting of the Committee on Banking and Insurance (Jan. 12, 2021) (statement of David Altmaier,
Commissioner, Florida Office of Insurance Regulation).
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According to the OIR, the increased severity of claims involving litigation is driving adverse loss
reserve development, leading to high rate filings.7 Loss reserve development is the difference
between the original loss as initially reserved by the insurer and its subsequent evaluation later or
at the time of its final disposal.8 When adverse loss reserve development occurs, the claim costs
more than its reserve was originally estimated by the insurer.
In response to the aforementioned challenges in Florida’s property insurance market, the 2021
Legislature passed CS/CS/CS/SB 76 (2021).9 The bill addressed multiple aspects of the property
insurance market, including solicitations regarding roof claims, notice of bringing a civil action
in a property insurance dispute, attorney fee awards in first-party property insurance litigation,
and the eligibility standards and ratemaking of Citizens.
Property Insurance Practices by Contractors
The 2021 property insurance law attempted to address increases in roof claims by prohibiting
contractors, and persons acting on behalf of contractors, from:
 Soliciting residential property owners through prohibited advertisements, which are
communications to a consumer that encourage, instruct, or induce a consumer to contact a
contractor to file an insurance claim for roof damage;
 Offering the residential property owner consideration to perform a roof inspection or file an
insurance claim;
 Offering or receiving consideration for referrals when property insurance proceeds are
payable;
 Engaging in unlicensed public adjusting; and
 Providing an authorization agreement to the insured without providing a good faith estimate.
The above acts are subject to license discipline by the Department of Business and Professional
Regulation and a $10,000 fine per violation. The law provides the residential property owner
may void the contract with the contractor within 10 days of its execution if the contractor fails to
provide notice to the residential property owner of the contractor’s prohibited practices.
The law prohibits licensed contractors and subcontractors from advertising, soliciting, offering to
handle, handling, or performing public adjuster (PA) services without a license. The prohibition
does not prohibit the contractor from recommending the consumer consider contacting his or her
insurer to determine if the proposed repair is covered by insurance.
The law prohibits a PA, PA apprentice, or person acting on behalf of a PA or PA apprentice,
from offering financial inducements for allowing a roof inspection of residential property or
making an insurance claim for roof damage. The law also prohibits them from offering or
accepting consideration for referring services related to a roof claim. Each violation subjects the
PA or PA licensee to up to a $10,000 fine. Unlicensed persons not otherwise exempted from PA
7
Florida Senate, Meeting of the Committee on Banking and Insurance (Jan. 12, 2021) (statement of David Altmaier,
Commissioner, Florida Office of Insurance Regulation)
8
International Risk Management Institute, Glossary, https://www.irmi.com/term/insurance-definitions/loss-development (last
visited Jan. 27, 2021).
9
Ch. 2021-77, Laws of Florida.
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licensure commit the unlicensed practice of public adjusting when they do these prohibited acts,
and are subject to a $10,000 fine per act and the criminal penalty for unlicensed activity.
Regulations of Commercial Speech
The United States Supreme Court set forth the standards for analyzing whether a restriction on
commercial speech10 violates the First Amendment of the United States Constitution in the case
of Central Hudson Gas & Elec. Corp. v. Public Service Commission of New York.11 Justice
Powell succinctly set forth the standards.
In commercial speech cases, then, a four-part analysis has developed. At
the outset, we must determine whether the expression is protected by the
First Amendment. For commercial speech to come within that provision, it
at least must concern lawful activity and not be misleading. Next, we ask
whether the asserted governmental interest is substantial. If both inquiries
yield positive answers, we must determine whether the regulation directly
advances the governmental interest asserted, and whether it is not more
extensive than is necessary to serve that interest.12
The court explained in Central Hudson that if a law restricts commercial speech that address
speech that is not misleading or related to unlawful activity, the gove