Florida lawmakers look at raising Citizens coverage cap

Pointing to increased home values and difficulties finding property insurance, a Florida Senate committee recently approved a bill that would allow residents with homes valued at more than $700,000 to get coverage from the state's Citizens Property Insurance Corp.

Under current law, Citizens is barred from selling policies for homes with a "dwelling replacement cost" of $700,000 or more, except in Miami-Dade and Monroe counties, where the limit is $1 million. The bill (SB 1106) would allow coverage for homes throughout the state with dwelling replacement costs between $700,000 and $1 million if private insurers do not offer comparable coverage for the homes.

"Citizens was created just for this — to be the insurer of last resort," bill sponsor Ed Hooper, R-Clearwater, said before the Senate Banking and Insurance Committee voted unanimously to approve the measure.

But the bill would be a significant change for lawmakers, who have argued for years that Citizens needs to shrink. It is not clear how many newly eligible policies would land in Citizens if the bill passes.

Banking and Insurance Chairman Jim Boyd, R-Bradenton, acknowledged he has been reluctant to add more policies to Citizens. Boyd led efforts in 2022 to pass an overhaul of the property-insurance system that included changes aimed at shifting policies from Citizens into the private market.

"We're in unusual times right now," Boyd, an insurance agent, said. "And while the market, I think, is starting to respond to the reforms we made, it's still a little ways off. So, there's certain things as a legislature I think we need to do."

While the bill would allow residents with homes valued at more than $700,000 to get Citizens coverage, it includes caveats — and extra costs for those homes.

As an example, annual rate increases for Citizens customers are limited by what is known in insurance circles as a "glide path." That will limit rate increases to 13% in 2024, 14% in 2025 and 15% in 2026. But under the bill, the glide path would not apply to homes with dwelling replacement costs of $700,000 or more, meaning they could face larger rate increases than other Citizens customers with lower-value homes.

Also, the bill would impose a surcharge on policies of $700,000 or more. Those surcharges would be $2,500 or 25% of a home's premium, whichever is less.

Dwelling replacement costs reflect the amount of money that would be required to rebuild homes. They can differ from market values of homes, at least in part because they do not include land values.

Rep. Doug Broxson, a Gulf Breeze Republican who is an insurance agent, said people with homes valued over $700,000 now might have to consider purchasing what is known as surplus-lines coverage if they cannot find policies in the regular market. Surplus-lines carriers don't face the same regulations as other insurers on such things as rates and coverage requirements.

At the same time, home values have soared in many parts of the state.

"Ten years ago, $700,000 would have been a mansion, I think, but today it is just a home," Hooper told reporters after the committee vote.

With the 60-day legislative session starting its second week Tuesday, it remains to be seen whether Hooper's bill will ultimately pass. Rep. Kim Berfield, R-Clearwater, has filed a similar House bill (HB 889).

Also, other lawmakers have filed bills that would make changes related to Citizens coverage. Among them, Sen. Ana Maria Rodriguez, R-Doral, and Rep. Jim Mooney, R-Islamorada, filed bills (SB 604 and HB 565) that would increase the Citizens coverage limit in Miami-Dade and Monroe counties from $1 million to $1.5 million.

Miami-Dade and Monroe have had a $1 million cap because state regulators determined they do not have a "reasonable degree of competition" for insurance coverage.

Citizens has grown during the past three years to become the state's largest property insurer as private carriers dropped customers and raised rates because of financial problems. Citizens had 1.232 million policies as of Friday, according to data on its website.

It reached as many as 1.412 million policies in fall 2023 before seeing decreases because of a "depopulation" program, which is designed to move customers into the private market. ¦