HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 1503 Citizens Property Insurance Corporation
SPONSOR(S): Commerce Committee, Insurance & Banking Subcommittee, Esposito
TIED BILLS: IDEN./SIM. BILLS: CS/SB 1716
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 17 Y, 0 N, As CS Fortenberry Lloyd
2) Commerce Committee 18 Y, 0 N, As CS Fortenberry Hamon
SUMMARY ANALYSIS
The bill makes various changes to Citizens Property Insurance Corporation (Citizens), including:
 Surplus Lines: permits surplus lines insurers that meet certain financial requirements to take out
policies from Citizens issued on dwellings that are not primary residences; provides definitions to
accomplish these take outs.
 Flood coverage: effective upon becoming law, requires Citizens’ policyholders who must purchase
flood insurance as a condition of eligibility for Citizens’ coverage to purchase only dwelling coverage for
a flood loss rather than dwelling and contents coverage.
 Combining Accounts: eliminates a significant amount of statutory language that is no longer needed
because Citizens has combined the Personal Lines Account, the Commercial Lines Account, and the
Coastal Account, into one Citizens Account, as of January 1, 2024.
 Operations and Management: allows Citizens’ executive director to appoint a designee to act as its
agency head; allows Citizens to share information with NICB to assist in efforts to fight insurance fraud;
allows Citizens to obtain patents, copyrights, and trademarks, and to enforce related rights.
The bill has no impact on local or state government revenues or expenditures. It has a likely indeterminate
positive and negative direct economic impact on the private sector.
Except as otherwise expressly provided, the bill is effective on July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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DATE: 2/26/2024
 FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
General Background
Citizens Property Insurance Corporation (Citizens) is a not-for-profit, tax-exempt government entity that
provides property insurance to those who are unable to find affordable coverage in the private market.
Citizens was created to serve as Florida’s property insurer of last resort. 1 Applicants are eligible for
coverage if no admitted private carrier2 will write them a policy for a premium that is within 20 percent
greater than what Citizens would offer for comparable coverage. 3
The policies that Citizens writes include the following:
 Standard Personal Lines Policies – comprehensive multiperil policies providing full coverage of
residential property equivalent to the coverage provided in the private insurance market;
 Basic Personal Lines Policies – 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 – 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 – cover the peril
of wind only;
 Commercial Lines Nonresidential Property Insurance Policies – cover the peril of wind only.4
Citizens’ 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 “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, did not exceed 10 percent above the previous year
for any individual policyholder, adjusted for coverage changes and surcharges. In 2021, the Legislature
revised this glidepath to increase it one percentage point per year to 15 percent, as follows: 5
 11 percent for 2022.
 12 percent for 2023.
 13 percent for 2024.
 14 percent for 2025.
 15 percent for 2026 and all subsequent years.
Citizens’ rate cap, also known as the “glidepath,” 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.6
1 Citizens Property Insurance Corporation (Citizens), Programs, https://www.citizensfla.com/programs (last visited Jan. 30, 2024).
2 The admitted market is comprised of insurance companies licenses to transact insurance in Florida.
3 S. 627.351(6)(c)5.a, F.S.
4 S. 627.351(6)(c)1., F.S.
5 S. 627.351(6)(n)5., F.S.
6 S. 627.351(6)(t), F.S. See also s. 627.351(6)(c)9. for information regarding Citizens purchase of reinsurance.
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 The implementation of this increase ceases when Citizens has achieved actuarially sound rates. 7 In
addition to the overall glidepath rate increase, Citizens can increase its rates to recover the additional
reimbursement premium it pays to the Florida Hurricane Catastrophe Fund (FHCF) as a result of the
annual cash build-up factor added to the price of the mandatory layer of the FHCF coverage, pursuant
to s. 215.555(5)(b), F.S.8
In addition to eventually being actuarially sound, Citizens’ rates must not be competitive with approved
rates charged by admitted insurers so that Citizens functions as a residual market to provide insurance
only when it cannot be obtained from admitted insurers. 9 This eliminates localized rate reductions
among Citizens policies. Additionally, OIR must provide Citizens with the information necessary to
determine whether Citizens’ rates are competitive.10
Until Special Session 2022A, in December 2022, Citizens’ rates did not differ based upon whether the
property insured is a policyholders’ primary residence, a policyholder’s second home (e.g. a vacation
home,) or occupied by a long-term tenant.11 However, the Legislature removed the glidepath rate
limitations for any new or renewal personal lines policy for non-primary residences written on or after
November 1, 2023.12 The rate for these residences rate must be no more than 50% above, but not less
than, the established rate for Citizens which was in effect one year before the date of the application for
coverage.13
Eligibility for Coverage
Current law requires Citizens to provide a procedure for determining the eligibility of a potential risk for
coverage from Citizens, and 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.14
Citizens may cover homes if the cost of replacing the dwelling, or the dwelling and its’ contents, is no
more than $700,000. In Miami-Dade and Monroe counties, Citizens may insure structures valued up to
$1 million as long as the Office of Insurance Regulation (OIR) continues to determine that these
counties are not competitive.15
Eligibility for Personal and Commercial Lines Residential Coverage at Renewal
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 20 percent greater than the rate for
comparable coverage from Citizens, inclusive of surcharges and assessments being levied on the
policy by Citizens.16 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, but policy
administration and liability transfers to the assuming insurer. 17
7 S. 627.351(6)(n)7., F.S.
8 S. 627.351(6)(n)6., F.S.
9 S. 627.351(6)(n)1., F.S.
10
Id.
11 Citizens would not issue a personal lines policy to someone using a home as a short-term vacation rental as that is considered a
business use of the home. Citizens is currently prohibited from issuing wind-only policies to commercial lines residential condominiums
when 50 percent or more of the units in the condominium are rented more than eight times per calendar year for less than 30 d ays in
each rental period. S. 627.351(6)(a)6., F.S.
12 S. 627.351(6)(n)8., F.S.
13 Id.
14 See Citizens, Revised Underwriting Manuals, https://www.citizensfla.com/-/20160329-revised-underwriting-manuals (last visited Jan.
28, 2024).
15 S. 627.351(6)(a)3, F.S. If OIR makes a finding that other counties are not competitive, Citizens would be able to insure prop erties up
to $1 million in value in those counties, as well.
16 S. 627.351(6)(c)5., F.S.
17 Id.
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 Eligibility after a Take-out Offer
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 event that
Citizens is unable to meet its obligations.18 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.19 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;20
 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
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 description of coverage; and
o A comparison of the estimated premium and coverage offered by the insurer to the
estimated premium and coverage provided by Citizens. 21
When Citizens’ policyholders receive take-out offers from authorized insurers that include premiums
that are not more than 20 percent greater than Citizens’ renewal premium for comparable coverage,
inclusive of surcharges and assessments being levied on the policy by Citizens, they are no longer
eligible for Citizens’ coverage.22 Citizens’ must notify policyholders that they have received a take-out
offer and that the offer renders their risks ineligible for Citizens’ coverage.23
Effect of the Bill – Surplus Lines
The bill permits surplus lines insurers that meet certain financial requirements to take out policies from
Citizens that are written on dwellings that are not primary residences. 24 The bill includes various
definitions to assist Citizens with these take outs. While surplus lines insurers do not ordinarily have
their rates approved by OIR, the bill requires these insurers to have rates approved for the purposes of
their planned Citizens’ take outs. The bill does not prohibit a risk that was taken out by a surplus lines
insurer from returning to Citizens subject to existing eligibility criteria.
18 S. 627.351(6)(q)3.a., F.S.
19 Ch. 2016-229, Laws of Fla.
20 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.
21 S. 627.351(6)(ii), F.S.
22 Id.
23 Id.
24 Surplus lines insurance refers to a category of insurance for which the admitted market is unable or unwilling to provide coverage .
The administration of surplus lines insurance business is managed by the Florida Surplus Lines Service Office. S. 626.921, F. S.
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 Flood Coverage Requirements
Until Special Session 2022A, in December 2022, Citizens could not require a policyholder or applicant
to obtain flood insurance as a condition of coverage from Citizens if a policyholder or applicant signs a
form affirming that Citizens does not provide flood insurance coverage, and that, if the policyholder or
applicant does not obtain flood coverage in addition to a policy from Citizens, the risk is not covered for
flood damage.25 A Citizens policyholder who did not obtain flood coverage and executed such a form,
and who made a claim for water damage against Citizens, had the burden of proving the damage was
not caused by flooding.26
Under s. 627.715, F.S., authorized insurers may issue personal lines residential flood coverage. Such
coverage includes, but is not limited to, standard flood insurance, which is equivalent to that provided
by the National Flood Insurance Program (NFIP), and preferred and customized flood insurance, which
provide additional coverage from that provided by standard flood coverage. 27
In April 2023, Citizens began to require personal lines residential policyholders and applicants purchase
and maintain flood insurance coverage that is at least equivalent to the coverage provided by the
NFIP.28 The policyholder or applicant must execute a form affirming that Citizens does not provide flood
insurance and that if the policyholder or applicant does not obtain flood insurance, his or her risk will not
be eligible for coverage from Citizens.29 Citizens may deny coverage to a personal lines residential
policyholder or applicant who refuses to purchase and maintain flood insurance.30
The purchase of flood coverage by personal lines residential policyholders and applicants has been
implemented as follows:31
 The following Citizens’ policyholders are not required to purchase flood overage as a condition
of maintain their Citizens policies:
o policyholders whose Citizens policies do not provide wind coverage; and
o policyholders whose Citizens policies provide coverage under a condominium unit
owners form.
 All policyholders whose Citizens-insured property is located within the special flood hazard area
defined by the Federal Emergency Management Agency must have flood coverage in place:
o At the time of initial policy issuance for all new policies issued by Citizens on or after
April 1, 2023.
o By the time of policy renewal for all personal lines residential policies renewing on or
after July 1, 2023.
 All other policyholders must have flood coverage in place for policies effective on or after:
o January 1, 2024, for property valued at $600,000 or more.
o January 1, 2025, for property valued at $500,000 or more.
o January 1, 2026, for property valued at $400,000 or more.
o January 1, 2027, for all other personal lines residential property insured by Citizens.
The law requiring certain Citizens’ policyholders to purchase flood coverage has been interpreted to
require the purchase of both dwelling and contents coverage for flood losses. When policyholders with
existing flood policies have added contents coverage to policies that covered the dwelling only, this has
triggered huge premium increases under the NFIP’s newly-implemented Risk Rating 2.0 pricing
approach.