Florida Bills Moving, But Agents Disagree on One That Bars Cancellations After Storms

Florida legislation that has been called an “agents’ bill” because it could perhaps make life a little easier for insurance agents after storms, passed a major hurdle this week, moving it closer to approval by the full Legislature. But all Florida agents are not in agreement on some late changes to the measure.

And other bills that would would let surplus lines cover more second homes also passed key committees. Senate Bill 1716 and House Bill 1503 would allow surplus lines carriers to take out policies from Citizens on homes that are not primary residences. SB 1716, by Sen. Jim Boyd, was approved by the Senate Fiscal Policy Committee on Tuesday. HB 1503 sailed through the House Commerce Committee and is now awaiting a floor vote.

The bills address a long-standing concern among some lawmakers that Citizens, with its below-market rates in many cases, should not be writing vacation homes and second homes for out-of-state residents. Boyd told the Tampa Bay Times that the plan would help reduce the number of policies and exposure held by Citizens, which remains the largest property insurer in the state with about 1.2 million policies in force.

But others worried that surplus lines’ claims would not have the backing of the Florida Insurance Guaranty Association in case of insolvency. HB 1503 would require surplus lines insurers to have an A.M. Best financial strength rating of “A-” or better and that residential policies be managed by a Florida broker. The measure also would modify the 2022 requirement that Citizens’ policyholders also must purchase flood insurance. If the bill becomes law, those insureds would have to buy flood coverage for a dwelling loss, not for contents.

The Florida Surplus Lines Association has said it supports the bills, as does Baldwin Risk Partners, the Times reported.

Also this week, “the agents’ bills,” SB 1104, and HB 1149, have reportedly led to a rift between some Florida insurance agents.

The bills would bar cancellation or non-renewals of residential policies until 90 days after storm repairs have been completed, with some exceptions. That could give some relief to insurance agents that have said they are often besieged by policyholders who have seen policies canceled while their homes are not fully restored after a hurricane, forcing agents to scramble to find new coverage, a Florida Association of Insurance Agents representative said.

Amendments to the bills would grant the state insurance commissioner the authority to bar insurers from canceling or nonrenewing policies in ZIP codes that have been hit by flooding after a hurricane, for up to 270 days,

“Such an order would apply regardless of whether flood is a covered peril under a personal residential or commercial residential property insurance policy in force at the time of loss,” a staff analysis of the bill explains.

The bills also would require renewal policies to offer similar coverage as the previous policies.

The Florida Association of Insurance Agents has supported the bills. But the bills and amendments to allow the commissioner to step in have raised concerns by another agents’ group, the Professional Insurance Agents. The PIA said in a Wednesday letter to Senate leadership that it has concerns.

“We share concerns of other stakeholders that the inclusion of flood being added to the calculus for wind exposure will ultimately lead to insurers limiting their capacity for wind coverage in flood prone areas,” the PIA letter reads.

Lori Augustyniak, president of PIA, asked why the protection is needed at this time and urged lawmakers to say “no” in floor votes or to block the bill from advancing.

“The Legislature has made some significant reforms in the last two years. Let’s give those time to work and take a pause on this,” she said Thursday morning in a phone call.

She said it’s a non issue, and that PIA members have not heard from policyholders that have had their policies canceled due to flooding after a storm. “In our collective experience, we did not see the challenges trying to be addressed by these bills to be a systemic problem post-Ian or any storm, for that matter,” her letter reads.

In many cases, policyholders or agents can postpone cancellations or non-renewals through communication with carriers, Augustyniak noted. To put prohibitions into law could create a number of problems, she warned.

The FSLA also has raised concerns about the bills. “Many national carriers and large brokers believe (the change) will negatively impact capacity,” the FSLA said in a statement.

A bill that passed a House committee early in the session, HB 625, would have allowed Citizens to write condominiums that include rental properties, something now barred by law. But that bill has seen little action and an effort to include the language in SB 1716 and HB 1503 has not been successful, lobbyists have said.