Florida is making moves to tighten who can get coverage from Citizens Property Insurance Corporation, the state-backed insurer that steps in when others won’t. This change could push many commercial property owners back to private insurance companies, shaking up how these risks are handled in the state.
Sean Lorey, vice president and property broker at Jencap, shared that brokers are already preparing for a coming rush of new insurance applications as the reforms start to take effect. He said they’re adding staff and resources to handle a bigger workload.
Citizens grew quickly during Florida’s latest property insurance crisis. As private insurers raised prices or pulled back after several costly hurricanes, Citizens became the state’s largest property insurer by 2023, covering over 1.4 million policies. Since then, regulators have encouraged private insurers to take on more policies to reduce the state’s risk for big losses.
The new rules will make it harder for people to qualify for Citizens. If private insurance offers a comparable deal—within about 15% of Citizens’ price—policyholders will have to switch to the private market. Lorey pointed out that private insurers’ prices are already getting close to those of Citizens for many accounts, except the toughest ones.
Condo associations might feel the biggest change. Citizens insures a large number of them, especially after private companies stepped away from coastal wind risks. Lorey estimates that Citizens’ commercial property coverage is worth about $50 to $60 billion, with condo associations making up most of that. Moving these policies to private insurers isn’t necessarily bad, as many companies are willing to cover properties that pose lower risks, like newer buildings or those further from the coast. However, older or riskier properties near the coast may still struggle to find affordable coverage outside Citizens.
Some confusion has arisen around Citizens’ clearinghouse system, which reviews applications and gives private insurers a chance to offer coverage before Citizens steps in. Lorey clarifies that this process only applies if you want coverage from Citizens. If brokers place risks directly with private or excess and surplus (E&S) insurers, the clearinghouse isn’t involved.
The E&S market remains crucial for Florida, especially for tough-to-insure properties. These insurers handle risks that regular companies shy away from, like coastal wind damage and hazardous operations. The E&S sector has helped stabilize Florida’s property insurance scene during recent challenges by offering flexible coverage options.
Looking ahead to 2027, when these reforms are expected to start affecting policy renewals, Lorey advises agents to get ready early. Waiting until the last minute could create a rush of people trying to find new coverage as their policies come up for renewal. This shift could be one of the biggest changes to Florida’s property insurance market in over ten years.
For brokers like those at Jencap, this presents both challenges and opportunities. Lorey expects a significant increase in insurance requests as many accounts move from Citizens to private insurers in the coming months.