A Florida Senate committee has given the green light to a new bill aimed at changing how commercial property insurance is handled in the state. The bill, known as Senate Bill 1028, would set up a system for surplus lines insurers to take over certain commercial policies from Citizens Property Insurance Corp., Florida’s insurer of last resort.
The idea behind SB 1028 is to allow qualified surplus lines insurers to make offers to take on commercial residential and non-residential policies before Citizens issues or renews coverage. But not just any insurer can join in. They must meet tough financial standards, including a strong rating of A- or better from AM Best and a significant financial size. The Florida Office of Insurance Regulation would check to make sure these insurers meet the requirements before they can make offers.
The bill also asks these insurers to show they have solid experience in the surplus lines market and have at least five years of audited financial statements that are public. Citizens would still have the power to set extra rules for insurers that want to participate.
When offers come in, Citizens must respond carefully. If they turn down a qualified offer, they’d have to make a premium adjustment if the offer is similar or better than Citizens’ coverage and costs no more than 20% more. And if multiple offers come in for the same policy, the adjustment would be based on the lowest price.
This bill was approved by the Senate Appropriations Committee on Agriculture, Environment, and General Government on February 4. Senator Joe Gruters, who sponsors the bill, explained that the goal is to give private insurers a chance first before Citizens steps in. He noted that a similar system was set up for homeowners’ insurance back in 2013 and has worked well, but the commercial version was never fully put into action.
Florida Insurance Commissioner Mike Yaworsky supports efforts to lower Citizens’ risk but expressed concerns about less oversight for surplus lines insurers. He pointed out that these insurers have fewer rules about sharing renewal details and premiums with customers ahead of time. This could make things tricky for some policyholders. Yaworsky also raised worries about fees, the impact on agents, and policies being placed outside the U.S.
Senator Gruters responded by saying fees will only cover costs and mentioned that about 40% of Florida’s commercial insurance market is already handled by non-admitted insurers.
If the bill becomes law, the new surplus lines clearinghouse must be up and running by January 1, 2027. This change could shift how commercial property insurance is written in Florida, potentially offering more options for businesses and helping ease the burden on Citizens.