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 Fiscal Policy
BILL: CS/CS/SB 1716
INTRODUCER: Fiscal Policy Committee; Banking and Insurance Committee; and Senator Boyd
SUBJECT: Citizens Property Insurance Corporation
DATE: February 29, 2024 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Knudson Knudson BI Fav/CS
2. Knudson Yeatman FP Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 1716 revises Citizens Property Insurance Corporation’s (Citizens) eligibility criteria,
and authorizes surplus lines insurers meeting certain criteria to make take-out offers to certain
risks, specifies that the requirement that Citizens personal lines policyholders must maintain
flood insurance only requires coverage on the structure, facilitates the transition of Citizens into
an organizational structure where all policies are held in a single account, revises the criteria for
appointment as a licensed agent for Citizens, and makes additional changes.
The bill makes eligible for Citizens coverage personal lines residential risks with a replacement
value1 of at least $700,000 but less than $1 million that are located within certain zip codes
where the Office of Insurance Regulation (OIR) determines there is not a reasonable degree of
competition within the property insurance market. Risks made eligible pursuant to this provision
will be subject to a rate standard that does not allow for decreases and limits an annual increase
to 50 percent.
The bill allows surplus lines insurers meeting certain criteria and approved by the OIR to submit
take-out offers on personal lines residential risks insured by Citizens, or for which Citizens has
received an application for coverage, if the risks are not primary residences. A “primary
residence” is defined as a dwelling that is the policyholder’s primary home or is a rental property
that is the primary home of the tenant, and which the policyholder or tenant occupies for more
1
For an insured structure the replacement cost refers to the dwelling. For an insured single condominium unit, the
replacement cost is for the combined dwelling and contents.
BILL: CS/CS/SB 1716 Page 2
than 9 months of each year. A take-out offer from an approved surplus lines insurer will only
render a Citizens policyholder ineligible for Citizens the premium offered does not exceed the
Citizens premium on comparable coverage by more than 20 percent; this is the standard that
applies to take-out offers from authorized insurers. Only surplus lines insurers that are approved
to participate by the OIR may make participate in the take-out program. To obtain approval, the
surplus lines insurer apply to the OIR to participate in the take-out process, provide data to the
OIR related to coverage and rates, and file rates for review with the OIR for the take-out offer.
The surplus lines insurer must also meet certain criteria such as having an “A-” financial strength
rating from A.M. Best and having a personal lines residential risk program that is managed by a
Florida resident surplus lines broker.
The bill revises the Citizens eligibility requirement that certain personal lines residential risks
must maintain flood insurance, by requiring flood insurance only on the dwelling. This provision
is effective upon the bill becoming law.
The bill makes statutory changes to facilitate the transition of Citizens Property Insurance
Corporation from an organizational structure where Citizens policies are held in three different
accounts (a personal lines account, commercial account, and a coastal account) to a structure
where all Citizens policies are held in a single account (the Citizens account). A primary benefit
of a single-account structure is that it eliminates the possibility of a Citizens account
experiencing a deficit necessitating policyholder surcharges and emergency assessments while
one of Citizens’ other accounts has surplus funds.
The bill provides that only licensed agents holding appointments by at least three authorized
insurers that are actually writing or renewing property insurance in this state may be appointed
by Citizens as its licensed agents. Current law requires the agent to hold an appointment by only
one such insurer.
The bill also:
Revises the signed acknowledgment of potential policyholder surcharge and assessment
liability that agents must obtain from an applicant for Citizens coverage for the purpose of
conforming the revised surcharge and assessment liabilities associated with the
reorganization of Citizens into a single account;
Provides that the executive director of Citizens is the Agency head of Citizens for purposes
of procurement bid protests under s. 287.057, F.S., and authorizes the executive director to
appoint a designee to act on his or her behalf for all purposes under the that statute;
Deletes language prohibiting the application of the Division of Administrative Hearing’s
bond requirements related to Citizens bid protest hearings;
Allows licensed surplus lines agents access to confidential and exempt claims files for the
purpose of considering whether to write a risk currently insured by Citizens;
Authorizes Citizens to share its claims data with the National Insurance Crime Bureau
(NICB), so long as the NICB maintains the confidentiality of certain documents;
Authorizes Citizens to acquire patents, trademarks, and copyrights on work products and take
action to enforce its rights therein; and
Makes technical and clarifying changes.
BILL: CS/CS/SB 1716 Page 3
Except as otherwise provided, the bill is effective July 1, 2024.
II. Present Situation:
Citizens Property Insurance Corporation—Overview
Citizens Property Insurance Corporation (Citizens) 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.2 Citizens is not a private
insurance company.3 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).4
Citizens operates in accordance with the provisions in s. 627.351(6), F.S., and is governed by a
nine member Board of Governors (board) that administers its Plan of Operations. The Plan of
Operations is reviewed and approved by the Financial Services Commission.5 The Governor,
President of the Senate, Speaker of the House of Representatives, and Chief Financial Officer
each appoint two members to the board.6 The Governor appoints an additional member who
serves solely to advocate on behalf of the consumer.7 Citizens is subject to regulation by the
Office of Insurance Regulation (OIR).
Current Policies
As of November 30, 2023, Citizens reports 1,260,430 policies in-force with a total exposure of
$562.5 billion.8 That is a reduction of over 74,000 policies and $23.3 billion in exposure from
October 31, 2023.
Eligibility for Insurance in Citizens
Citizens is required to provide a procedure for determining the eligibility of a potential risk for
insurance in Citizens and provide specific eligibility requirements based on premium amounts,
value of the property insured, and the location of the property.9 Risks not meeting the statutory
eligibility requirements cannot be insured by Citizens. Citizens has additional eligibility
requirements set out in their underwriting rules. These rules are approved by the OIR and are set
out in Citizens’ underwriting manuals.10
2
The term “admitted market” means insurance companies licensed to transact insurance in Florida.
3
Section 627.351(6)(a)1., F.S.
4
Section 2, ch. 2002-240, Laws of Fla.
5
Section 627.351(6)(a)2., F.S.
6
Section 627.351(6)(c)4.a., F.S.
7
Section 627.351(6)(c)4., F.S.
8
Corporate Analytics Business Overview, September 20, 2023 Report, p.1 https://www.citizensfla.com/documents
(last visited January 10, 2024).
9
Section 627.351(6)(c)5., F.S.
10
See Citizens Property Insurance Corporation, PIF Standard Summary Report for Period Ending Nov. 30, 2023 (December
6, 2023) (On file with the Florida Senate Banking and Insurance Committee).
BILL: CS/CS/SB 1716 Page 4
Eligibility Based on Premium Amount
An applicant for residential insurance cannot buy insurance in Citizens if an authorized insurer in
the private market offers the applicant insurance for a premium that does not exceed the Citizens
premium by 20 percent or more. 11 The coverage offered by the private insurer must be
comparable to Citizens coverage.
A residential policyholder may not renew insurance in Citizens if an authorized insurer offers to
insure the property at a premium no more than 20 percent greater than the Citizens renewal
premium.12 The insurance coverage offered from the private market insurer must be comparable
to the insurance from Citizens in order for the eligibility requirement for renewal premium to
apply.13
Eligibility Based on Value of Property Insured
In addition to the eligibility restrictions based on premium amount, current law provides
eligibility restrictions for homes and condominium units based on the value of the property
insured.14 Structures with a dwelling replacement cost of $700,000 or more, or a single
condominium unit that has a combined dwelling and contents replacement cost of $700,000 or
more, are not eligible for coverage with Citizens.15 However, Citizens is allowed to insure
structures with a dwelling replacement cost, or a condominium unit with a dwelling and contents
replacement cost, of one million dollars or less in Miami-Dade and Monroe counties, after the
OIR determined these counties to be non-competitive.16
Citizens “Glidepath” Rates
From 2007 until 2010, Citizens rates were frozen by statute at the level that had been established
in 2006.17 In 2010, the Legislature established a “glidepath” to impose annual rate increases up
to a level that is actuarially sound. Under the original established glidepath, 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
changes and surcharges.18 In 2021, the Legislature revised this glidepath to increase it one
percent per year to up to 15 percent, as follows:19
11 percent for 2022.
12 percent for 2023.
13 percent for 2024.
14 percent for 2025.
15 percent for 2026 and all subsequent years.
11
Section 627.351(6)(c)5., F.S.
12
Section 627.351(6)(c)5.a., F.S.
13
Id.
14
Section 627.351(6)(a)3., F.S.
15
Section 627.351(6)(a)3.d., F.S.
16
The OIR, Final Order Case No: 165625-14, Dec. 22, 2014, https://www.floir.com/siteDocuments/Citizens165625-14-
O.pdf;See also Section 627.351(6)(a)3.d., F.S., and Citizens, Update to Maximum Coverage Limits, Nov. 12, 2019,
https://www.citizensfla.com/-/2019-roof-permits-acceptable-for-fbc-credits (all sites last visited January 10, 2024).
17
Section 15, ch. 2006-12, Laws of Fla.
18
Section 10, ch. 2009-87, Laws of Fla.
19 Section 627.351(6)(n)5., F.S.
BILL: CS/CS/SB 1716 Page 5
The implementation of this increase ceases when Citizens has achieved actuarially sound rates.20
In addition to the overall glidepath 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.21 The glidepath does not apply to policies written on or after November
1, 2023, that:
Do not cover a primary residence;
Are new policies under which the coverage for the insured risk, before the date of application
with the corporation, was last provided by an insurer determined by the office to be unsound
or an insurer placed in receivership under chapter 631; or
Are subsequent renewals of those policies.22
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.23 In the event of a catastrophic storm or series of smaller storms, reserves could be
exhausted, leaving Citizens unable to pay all claims.24 Under Florida law, if the Citizens Board
of Directors determines a Citizens account has a projected deficit, Citizens is authorized to levy
assessments25 on its policyholders and on each line of property and casualty line of business
other than workers’ compensation insurance and medical malpractice insurance.26
Citizens Accounts
Citizens has three different accounts through which it offers property insurance: a personal lines
account, a commercial lines account, and a coastal account.
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.27
20
Section 627.351(6)(n)7., F.S.
21
Section 627.351(6)(n)6., F.S.
22
Section 627.351(6)(n)8., F.S.
23
Citizens, 2023 Rate Kit, https://www.citizensfla.com/documents/ (last visited January 10, 2024).
24
Citizens, Insurance/Insurance 101/Assessments, https://www.citizensfla.com/assessments (last visited January 10, 2024).
25
Assessments are charges that Citizens and non-Citizens policyholders can be required to pay, in addition to their regular
policy premiums.
26
Accident and health insurance 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.
27
See s. 627.351(6)(b)2.a., F.S.,; Citizens, Account History and Characteristics,
https://www.citizensfla.com/documents/20702/1183352/20160315+05A+Citizens+Account+History.pdf/31f51358-7105-
40e9-aa75-597f51a99563 (Mar. 2016) (last visited Dec. 4, 2022).
BILL: CS/CS/SB 1716 Page 6
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.28
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.29
The Legislature has authorized Citizens to combine its three accounts into a single account,
which will ensure that Citizens has access to all of its assets to pay loss claims. The new account
is referred to as the Citizens account and will offer the various coverages and policies provided
pursuant to the three account structure. The combination of the Citizens accounts into a singl