A provision allowing surplus line insurers to take policyholders out of the state-backed insurance pool appears dead after the House sponsor pulled the measure from consideration Tuesday after losing a vote on an amendment he said guts the bill.
Following a lengthy debate, the House voted 63-52 in favor of a Senate amendment that would require the policyholder to agree to be switched from Citizens Property Insurance Corp. to a less regulated surplus lines insurer.
The original bill would have automatically taken the policy out of Citizens and required the policyholder to request to be put back.
After the House voted to have policyholders sign off on switches, the measure’s House sponsor, Rep. Jim Boyd (R-Bradenton) pulled the bill from consideration for now.
“This year, I think it probably is,” Boyd said when asked whether the bill was dead.
Speaking to reporters after Tuesday evening, Gov. Rick Scott expressed the disappointment of backers of the bill, who say the number of customers currently relying on Citizens — the largest property insurer in the state — is far too high.
“If we have the major hurricane, there’s not enough money in Citizens — it’s a real problem,” Scott said.
The procedural vote Tuesday underscored the heated debate over proposed strategies to depopulate Citizens, which now handles about 1.5 million policies.
Domestic carriers already have the ability to pull policyholders from Citizens and do not have to gain prior approval from the customers. Those insurers, however, charge rates set by the Office of Insurance Regulation and insured by the Florida Insurance Guaranty Association. Surplus lines companies — which may be offshore companies — do not fall under the same oversight and are not insured.
Surplus lines, which traditionally insure things traditional companies will not, have been growing players in property insurance.
During the House debate on Tuesday, Boyd said the bill would create a number of safeguards to ensure that companies offering surplus lines coverage would be safe for consumers, including providing proof that they could pay claims on back-to-back 50 year storms.
He noted that other amendments included in the returning Senate bill go even further by limiting rate hikes upon first renewal and requiring notice when proposed rate hikes by the surplus lines company exceed 10 percent.
“There is plenty of protection in place,” Boyd told members. “I just think this is an unnecessary burden that bogs the process down.”
Backers of allowing customers to decide whether to switch conceded it would require additional work up front by surplus carriers. Given the dollars involved, such upfront costs are reasonable, they said.
“These surplus-lines companies are going to be making tens, if not hundreds, of millions of dollars off your constituents,” said Rep. Evan Jenne (D-Dania Beach).
While the issue appears far less likely to be dealt with before the end of the legislative session Friday, Senate President Mike Haridopolos said nothing’s completely out of the picture until then.
“I think we’ll engage in more negotiations over the next three days,” Haridopolos said. “Politics is the art of the compromise.”