Florida House Gives Final Approval to Much-Debated Citizens Clearinghouse Bill

The Florida House of Representatives Monday night gave final approval to a Senate bill that will set up a clearinghouse to help offload Citizens Property Insurance commercial policies to admitted and surplus carriers—despite lingering opposition from a number of insurance agents and brokers around the state.

The bill, Senate Bill 1028, championed by Sen. Joe Gruters, was passed by a House vote of 88 to 19. Several representatives raised questions about the necessity of the bill and how it seems to be geared towards setting up a major wholesale broker to manage the clearinghouse.

But the measure passed without changes. Lawmakers and lobbyists have said it’s not certain if Florida Gov. Ron DeSantis will sign it into law. The bill was promoted by Ryan Turner, a large U.S. brokerage whose CEO has contributed heavily to Republican causes, according to news reports.

Gruters’ bill sprang up somewhat unexpectedly earlier in the legislative session. It went through a number of changes, meeting some but not all concerns raised by regulators and by the 20,000-member Florida Association of Insurance Agents.

Kyle Ulrich, president of the FAIA, wrote in a blog last week that the Senate version of the bill, as amended March 4 and approved by the House on Monday, had “some major differences that cause FAIA to have significant concerns for Florida’s independent agents and the consumers they currently represent.”

Those concerns include central tenets of the bill: Allowing surplus lines insurers to participate in the clearinghouse and allowing the clearinghouse administrator to also serve as the broker between the producing agent of record and the participating surplus lines insurer.

“Despite our unrelenting efforts to ensure the bill was in the best possible posture, an amendment was added to the Senate bill … that would now allow a surplus lines insurer to provide an eligibility terminating offer if the premium is within 15 percent of the Citizens’ premium,” Ulrich wrote.

Other agents and brokers said the bill was unnecessary and that the Florida commercial market, post-tort-reform, is functioning well.

“When you look at the extremely low commercial policy county in Citizens compared to the estimated $60 to $80 million cost to develop a commercial clearinghouse, one has to ask why,” wrote Fort Myers agency owner John Gardner. “There is ZERO upside for commercial clients on this.”

State Insurance Commissioner Michael Yaworsky had led much of the criticism of the bill early on. By last week, some of his concerns had been addressed by late amendments, including wording that gives the Office of Insurance Regulation more oversight of the program.

“We support the changes,” OIR’s press secretary said in an email last week.

The final bill left out a few key safeguards that Yaworsky, some Florida agents and a few lawmakers had called for, including a clause that would have barred the program manager from having conflicts of interest and would have required the administrator to be based in Florida.

Some in the industry said the clearinghouse, even with the lingering concerns, will prove to be valuable, helping to further reduce Citizens’ size and exposure and promoting more market-based competition.

“Citizens was established to be the insurer of last resort but they’ve gotten away from that through the years,” said Sean Lorey, a Florida-based vice president and broker for Jencap Specialty Insurance Services, a wholesale brokerage.

He said Jencap has no interest in bidding to be the program manager.

The final version of the bill can be seen here. The measure is considered to be one of influential Senator Gruters’ final actions in the Legislature. The Sarasota Republican is term-limited by law, and he has filed to run for Ingoglia’s job of chief financial officer, head of the Department of Financial Services.

The election is later this year.

Read More: Florida Senate Approves New Clearinghouse Bill Despite Sponsor’s Evasive Answers

Top photo: The House deliberating on SB 1028 Monday night. (The Florida Channel)