Florida lawmakers could grow Citizens insurance after years of resistance

The Legislature is advancing bills that would expand the number of homes eligible for Citizens.
Debris is scattered along Shell Point Beach homes the day after Hurricane Michael struck the Florida Panhandle in 2018.
Debris is scattered along Shell Point Beach homes the day after Hurricane Michael struck the Florida Panhandle in 2018. [ Times (2018) ]
Published Jan. 18|Updated Jan. 19

TALLAHASSEE — For decades, Republican lawmakers and governors have had a singular focus when it comes to Floridians with homes insured by the state-run Citizens Property Insurance: shed those policies.

Lately, they’re having a change of heart.

As homeowners continue to struggle to find coverage despite years of reforms, legislators this year are moving forward with plans to allow more of them to be covered by Florida’s insurer of last resort.

A Senate bill would allow owners of homes worth more than $700,000 — the current cap in all but two counties — to get Citizens insurance if they can’t find coverage on the private market.

A House bill would allow Citizens to cover condominiums in which more than 50% of units are short-term rentals.

If they pass, it would mark a major philosophical shift for Republican lawmakers.

For decades, legislators and insurance companies have opposed any actions that would grow Citizens, for both philosophical and practical reasons. The private market should take on hurricane risk, they’ve said.

And concentrating hurricane risk on the state would put Floridians on the hook. If a big enough storm hit the state and Citizens couldn’t pay out claims, all Floridians with property insurance policies would be hit with emergency assessments.

The about-face in allowing more people to qualify for Citizens coverage was noted by legislators, including Sen. Jim Boyd, R-Bradenton, who has long been an advocate for “depopulating” the corporation’s policies.

“We’re in unusual times right now,” Boyd said Tuesday.

Expanding coverage

SB 1106 would allow homes whose combined dwelling and contents are worth between $700,000 and $1 million to be covered by Citizens if they can’t find coverage on the normal market.

The current cap, which has been in place since 2017, is $700,000. Only residents of Miami-Dade and Monroe counties, where the insurance crisis is most dire, can be covered up to $1 million.

“Ten years ago, a $700,000 home would have been a mansion, but today it’s just a home,” said Sen. Ed Hooper, R-Clearwater, who is sponsoring the bill.

But the bill makes it pricier for homeowners in this price range to go with Citizens. Each policyholder would have to pay a $2,500 surcharge on top of the Citizens policy. Citizens’ typical cap on rate increases would not apply. And if they got an offer from a private carrier, the policyholder would be kicked out of Citizens automatically.

“This bill is designed to be an expensive fix,” said Hooper, who said he was considering amending the bill to make it expire in three years.

The unanimous vote on the bill Tuesday was surprising considering the Legislature’s long goal of reducing Citizens, Mark Friedlander, a spokesperson for the industry-backed Insurance Information Institute, said in a statement.

HB 625 would address the lack of wind insurance for condominiums, which was exacerbated by the sudden collapse of the Champlain Towers South in Surfside in 2021.

Citizens doesn’t offer wind-only coverage to condo associations in which more than 50% of the units are short-term rentals. The bill would remove that limitation.

“We want a healthy free market,” said the bill sponsor, Rep. James Buchanan, R-Sarasota. “And in the absence of that, at the very least we want a last-case-scenario opportunity for full coverage.”

Lawmakers on a House committee Thursday said they were reluctant but voted unanimously for it anyway.

“I think we need to do this, absolutely,” said Rep. Tom Fabricio, R-Miami Lakes. “But I think we need to take heed of the fact that this is an expansion of Citizens, and there will be ramifications down the road, unfortunately.”

Legislators didn’t know how many more policies the corporation could take on if the bills pass. A Citizens spokesperson said the corporation canceled or nonrenewed 12,832 policies for exceeding the coverage caps between 2021 and 2023. The corporation was still analyzing the bills.

Both would need to pass two more committees before making it onto their respective floors for a vote.

“The purpose of Citizens”

Citizens’ roots go back to the aftermath of 1992′s Hurricane Andrew, when its precursor was created by lawmakers to offer homeowners insurance to those who couldn’t find it. Mortgage lenders typically require homeowners to have insurance.

Since then, state officials have repeatedly agonized over the number of Citizens’ policies, and they’ve employed various methods to reduce its size.

After a series of hurricanes triggered the last insurance crisis, causing Citizens’ policy count to spike to an all-time high of 1.5 million in 2011, then-Gov. Rick Scott employed an aggressive effort to shed policies. New companies led by untested executives were allowed to assume tens of thousands of Citizens’ policies. Many of those companies failed.

In one case, Citizens’ board of governors paid St. Petersburg-based Heritage Property and Casualty Insurance $52 million to take out 60,000 policies. The company had contributed $110,000 to Scott’s reelection campaign.

Citizens’ policy count fell to about 420,000 in 2019 before rising to 1.4 million during the current crisis. Lawmakers in 2022 made it easier to remove people from Citizens, requiring policyholders to leave if they received an offer from a private insurer within 20% of their Citizens policy rate.

Lawmakers have cracked down on litigation to try to improve the insurance market, but Floridians are still struggling to find insurance.

“This is really the purpose of Citizens,” said Sen. Doug Broxson, R-Gulf Breeze, a longtime insurance agent. “This is unfortunate that we have to do this, but the people in the state deserve to have coverage.”