A Florida Senate committee has approved a bill that would create a clearinghouse allowing surplus lines insurers to assume certain commercial property policies from the state’s insurer of last resort.
Senate Bill 1028 would allow qualified non-admitted carriers to make takeout offers on commercial residential and non-residential policies written by Citizens Property Insurance Corp. before the state insurer issues or renews coverage.
Under the proposal, only surplus lines insurers that meet specific financial thresholds would be eligible to participate. The bill requires a financial strength rating of A- or higher and a financial size category of A-VII from AM Best. The Florida Office of Insurance Regulation would be tasked with confirming that carriers meet those standards before they can submit offers.
Eligibility would extend beyond ratings alone. SB 1028 requires participating insurers to demonstrate experience in the surplus lines market and to provide at least five years of publicly available audited financial statements. Citizens would retain authority to impose additional requirements on carriers making offers through the clearinghouse.
The bill also outlines how Citizens must respond to offers it receives. If Citizens rejects an offer from an approved surplus lines insurer, it would be required to apply a premium equalization adjustment if the proposed policy is substantially equal to or better than Citizens coverage and if the total cost of the surplus lines policy is no more than 20% higher. When multiple offers are made for the same policy, the adjustment would be calculated using the lowest-priced offer.
The Senate Appropriations Committee on Agriculture, Environment, and General Government approved the bill on February 4, according to legislative records.
During that committee hearing, bill sponsor Senator Joe Gruters said the clearinghouse is meant to ensure private market options are considered before Citizens provides coverage.
“Back in 2013, the legislature allowed Citizens to set up two separate clearinghouses; one for homeowners and one for commercial properties. While the homeowners clearinghouse was created, and has been successful, the commercial one was never fully implemented,” Gruters said.
Insurance Commissioner Mike Yaworsky said he supports reducing Citizens’ exposure but raised concerns about surplus lines oversight, pointing to looser renewal and disclosure rules compared with the admitted market.
“They do not have to disclose what the new premium might be, what new terms of coverage might be and what other provisions might be in place up until the day before the new policy is set to renew. That could be a significant challenge for a number of consumers that are in this residual marketplace right now,” Yaworsky said, adding his concerns about fees, agent impact, and the placement of policies outside the US.
To this, Gruters responded that fees are limited to cost recovery and noted that about 40% of Florida’s commercial market is already written by non-admitted carriers.
If enacted, SB 1028 would require the surplus lines clearinghouse to be operational by January 1, 2027.
