HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 1307 Citizens Property Insurance Corporation
SPONSOR(S): Commerce Committee, Insurance & Banking Subcommittee, Gregory and others
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 17 Y, 0 N, As CS Fortenberry Luczynski
2) Commerce Committee 18 Y, 5 N, As CS Fortenberry Hamon
SUMMARY ANALYSIS
The bill makes several changes to the operations of, and requirements for, Citizens Property Insurance
Corporation (Citizens), the state-run property insurer:
 Establishes that the Office of Insurance Regulation (OIR) must approve the method that Citizens uses
to value dwelling replacement cost.
 Prohibits a registered lobbyist from being a member of Citizens’ Board of Governors (board).
 Establishes that, at the time of appointment, Citizens’ executive director must have the experience,
character, and qualifications sufficient to qualify as a chief executive officer of an insurer in accordance
with the requirements for managers, officers, and directors of private insurers.
 Establishes that when Citizens’ personal lines residential or commercial lines residential policyholders
receive offers of coverage at renewal from authorized insurers, the risks are not eligible for coverage
from Citizens unless the premiums from the authorized insurers are more than a set percentage
greater than the renewal premiums for comparable coverage from Citizens. This percentage begins at
4 percent and increases incrementally to 20 percent by 2027.
 Establishes that for new applications for commercial lines residential risks, the risk is not eligible for
coverage by Citizens unless the premium for coverage from an authorized insurer is more than 20
percent greater than the premium for Citizens. SB 76 (2021) made the change from 15 percent to 20
percent for personal lines residential risks, but the change was not made for commercial lines
residential risks in that bill.
 Eliminates the ability of Citizens to include the cost of reinsurance in its rate calculations if it does not
purchase reinsurance.
 Establishes that when Citizens’ policyholders receive take-out offers from authorized insurers that
include premiums that are not more than a set percentage greater than Citizens’ premium for
comparable coverage, they are no longer eligible for Citizens’ coverage. This percentage begins at 4
percent and increases incrementally to 20 percent by 2027. The bill also requires that Citizens’ notify
policyholders of the fact that they have received such an offer and that the offer renders their risks
ineligible for Citizens’ coverage.
The bill has no effect on state or local government revenues or expenditures. It may have an indeterminate
negative impact on the private sector.
The bill is effective on July 1, 2022.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1307c.COM
DATE: 2/25/2022
 FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Citizens Property Insurance Corporation (Citizens)
Citizens is a state-created, not-for-profit, tax-exempt government entity that is an integral part of the
state, whose public purpose is to provide property insurance to those unable to find affordable
coverage in the private market.1 Citizens is overseen by a board and operated by an executive director.
Citizens writes both personal and commercial property policies, including the following:
 Standard personal lines policies that are comprehensive multiperil policies providing full
coverage of residential property equivalent to the coverage provided in the private insurance
market;
 Basic personal lines policies that are similar to dwelling fire policies that provide coverage
meeting the requirements of the secondary mortgage market, but are more limited in coverage
than under a standard policy;
 Commercial lines residential and nonresidential policies that are generally similar to the basic
perils of full coverage obtainable for commercial residential structures and commercial
nonresidential structures in the private market;
 Personal lines and commercial lines residential property insurance policies that cover the peril
of wind only;
 Commercial lines nonresidential property insurance policies that cover the peril of wind only.2
Dwelling Valuation
Background
Dwelling coverage, sometimes called “dwelling insurance,” is the part of a homeowners policy that pays
for the rebuilding or repair of the physical structure of the home if it is damaged by a covered peril. 3
Coverage may be provided on a replacement cost or actual cash-value basis. Replacement cost
includes the cost of materials and labor necessary to rebuild or repair the home. Actual cash value is
calculated by subtracting depreciation from replacement cost.
Since January 1, 2017, with certain exceptions, a structure that has a dwelling replacement cost of
$700,000 or more, or a single condominium that has a combined dwelling and contents replacement
cost of $700,000 or more, is not eligible for Citizens’ coverage.4 However, in counties where the Office
of Insurance Regulation (OIR) has determined there is not a reasonable degree of competition in the
availability of property insurance, the limit for the dwelling replacement cost of a structure, or the
dwelling and contents replacement cost of a single condominium eligible for coverage is $1,000,000. 5
Insurance companies typically use information on a customer’s application, proprietary formulas, and
third-party data to calculate dwelling replacement costs, which differ from market value.6 Current law
does not specify the method by which Citizens must calculate dwelling replacement cost and does not
involve OIR in the process of completing such calculations.
Effect of the Bill
1 S. 627.351(6)(a)1., F.S.
2 S. 627.351(6)(c)1., F.S.
3 Allstate, What is Dwelling Insurance Coverage?, https://www.allstate.com/tr/home-insurance/dwelling-insurance.aspx
(last visited Jan. 29, 2022).
4 S. 627.351(6)(a)3.d., F.S.
5 Id.
6 Kin, What is a Replacement Cost Estimate?, https://www.kin.com/faq/replacement-cost-estimate (last visited Jan. 29,
2022).
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 The bill establishes that OIR must approve the method that Citizens uses to value dwelling replacement
cost. It also removes obsolete language regarding dwelling and contents coverage provided by
Citizens.
Qualifications of Citizens’ Board Members
Background
Citizens is overseen by its board, which consists of nine individuals who must be residents of different
geographical areas of Florida.7 The Governor, Chief Financial Officer, President of the Senate, and
Speaker of the House, each appoint two members of the board. 8 The Governor appoints one additional
member who serves solely to advocate on behalf of consumers. 9 At least one of the two members
appointed by each appointing officer must have demonstrated experience in insurance. 10 Current law
does not address a registered lobbyist for the executive or legislative branches being a member of the
board.
Effect of the Bill
The bill prohibits a registered lobbyist for the executive or legislative branches from being a member of
the board.
Qualifications of Citizens’ Executive Director
Background
Citizens is run by an executive director that is engaged by the board and serves “at the pleasure of the
board.”11 The executive director is subject to confirmation by the Senate. 12 He or she is responsible for
employing other staff as Citizens requires, subject to review and agreement by the board. 13 However,
current law does not specify the experience, character, or qualifications that an individual must have in
order to be qualified to serve as Citizens’ executive director.
Florida law provides guidance regarding the qualifications necessary for individuals to serve as officers
and directors of private insurers within the state.14 In general, OIR must not grant or continue to grant
authority to transact insurance to any insurer, which has management, officers, or directors that it finds
to be incompetent or untrustworthy, or “so lacking in insurance company managerial experience as to
make the proposed operation hazardous to the insurance-buying public.”15 Additionally, OIR must not
grant or continue authority to transact insurance to any insurer if any person in control of the insurer
“does not possess the financial standing and business experience for the successful operation of the
insurer.”16
Effect of the Bill
The bill establishes that, at the time of appointment, Citizens’ executive director must have the
experience, character, and qualifications sufficient to qualify as a chief executive officer of an insurer in
accordance with s. 624.404(3), F.S.
7 S. 627.351(6)(c)4., F.S.
8 Id.
9 Id.
10 Id.
11 Id.
12 Id.
13 Id.
14 See s. 624.404(3), F.S.
15 S. 624.404(3)(a), F.S.
16 S. 624.404(3)(b), F.S.
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 Competitiveness of Citizens’ Rates and Eligibility for Coverage
Current law requires Citizens to provide a procedure for determining the eligibility of a potential risk for
coverage from Citizens and provides specific eligibility requirements based on premium amounts, value
of the property insured, and the location of the property. Risks not meeting the statutory eligibility
requirements cannot be insured by Citizens. Citizens also has additional eligibility requirements set out
in their underwriting rules. These rules are approved by OIR and set out in Citizens’ underwriting
manuals.17
Citizens’ rate cap, also known as the “glide path,” is not closing the gap between Citizens rates and
private market rates. Instead, because of the rate cap and the increasing rates of private property
insurance, the gap is growing and making Citizens more like a competitor to private insurers than an
insurer of last resort. Because Citizens’ rates are often well below those of private carriers, Citizens
may be more competitive than otherwise intended. Due to Citizens’ structure, its rates do not contain
certain elements that the rates of private insurers contain. Citizens does not pay taxes like private
insurers and does not need to purchase as much reinsurance as private insurers because of Citizens’
higher levels of capital and surplus.
Eligibility for Personal and Commercial Lines Residential Coverage at Renewal
Background
Both personal lines residential and commercial lines residential policyholders cannot renew Citizens’
insurance policies if an authorized insurer offers to insure their property at a premium equal to or less
than Citizens’ renewal premium.18 Additionally, the insurance from the authorized insurer must be
comparable to the insurance from Citizens in order for the renewal premium eligibility requirement to
apply.19
Effect of the Bill
The bill establishes that when Citizens’ personal lines residential or commercial lines residential
policyholders receive offers of coverage at renewal from authorized insurers, the risks are not eligible
for coverage from Citizens unless the premiums from the authorized insurers are more than the
following percent greater than the renewal premiums for comparable coverage from Citizens:
 4 percent for policies that renew during 2023.
 8 percent for policies that renew during 2024.
 12 percent for policies that renew during 2025.
 16 percent for policies that renew during 2026.
 20 percent for policies that renew during 2027 and during all subsequent years.
The bill also establishes that policies removed from Citizens under an assumption agreement may
remain on Citizen’s policy forms through the end of the policy term.
Eligibility for New Commercial Lines Residential Coverage
Background
New applicants are eligible for commercial lines residential coverage from Citizens if no authorized
insurer will write them a policy for a premium that is less than 15 percent greater than what Citizens
would offer them for comparable coverage.20 However, new applicants are eligible for personal lines
17 See Citizens Property Insurance Corporation, Revised Underwriting Manuals, https://www.citizensfla.com/-/20160329-
revised-underwriting-manuals (last visited Jan. 30, 2022).
18 S. 627.351(6)(c)5., F.S.
19 Id.
20 S. 627.351(6)(c)5., F.S.
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 residential coverage if no authorized insurer will write them a policy for a premium that is less than 20
percent greater than what Citizens would offer them for comparable coverage. 21
Effect of the Bill
The bill establishes that for new applications for commercial lines residential risks, the risk is not eligible
for coverage by Citizens unless the premium for coverage from an authorized insurer is more than 20
percent greater than the premium for Citizens.22
Purchase of Reinsurance
Background
Current law requires that Citizens make its best efforts to procure catastrophe reinsurance at
reasonable rates to cover its projected 100-year probable maximum loss (PML).23 Due to the high cost
of reinsurance in recent years, some years Citizens has determined that reinsurance is not available at
reasonable rates and has not purchased it. If catastrophe reinsurance is not available at reasonable
rates, Citizens need not purchase it, but Citizens shall include the costs of reinsurance to cover its
projected 100-year PML in its rate calculations even it if does not purchase it. 24
Effect of the Bill
The bill changes existing statutory language regarding Citizens’ purchase of reinsurance so that
Citizens shall no longer include the cost of reinsurance in its rate calculations if it does not purchase
reinsurance.
Citizens’ Take-out Program/Depopulation
Eligibility After a Take-out Offer
Background
Florida law requires that Citizens create programs to help return its policyholders to the private property
insurance market and to reduce the risk of additional assessments for all Floridians in the even that
Citizens is unable to meet its obligations.25 In 2016, the Legislature passed requirements that by
January 1, 2017, Citizens amend its operations relating to take-out agreements, whereby private
insurers remove policies from Citizens.26 As part of these requirements, a policy may not be taken out
of Citizens unless Citizens:
 Publishes a periodic schedule of cycles during which an insurer may identify, and notify Citizens
of, policies the insurer requests to take out;27
 Maintains and makes available to the agent of record a consolidated list of all insurers
requesting to take out a policy; the list must include a description of the coverage offered and
the estimated premium for each take-out request;
 Provides written notice to the policyholder and the agent of record regarding all insurers
requesting to take-out the policy and regarding the policyholder’s option to accept a take-out
21 Id.
22 SB 76 (2021) made the change from 15 percent to 20 percent for personal lines residential risks, but the change was
not made for commercial lines residential risks in that bill.
23 S. 627.351(6)(c)9., F.S. Probable maximum loss refers to the value that may be reasonably expected to be lost in a
single casualty. IRMI, https://www.irmi.com/term/insurance-definitions/probable-maximum-loss (last visited Feb. 3, 2022).
If an insurer is buying reinsurance to cover its 100-year probable maximum loss, it is purchasing reinsurance to cover the
maximum loss that has a chance of occurring once in 100 years.
24 Id.
25 S. 627.351(6)(q)3.a., F.S.
26 Ch. 2016-229, Laws of Fla.
27 These requests from insurers must include a description of the coverage offered and an estimated premium for it and
must be submitted to Citizens in a form prescribed by Citizens.
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 offer or to reject all take-out offers and to remain with Citizens. The notice must be in a format
prescribed by Citizens and include, for each take-out offer:
o The amount of the estimated premium;
o A