March 6, 2012
A proposal that would allow surplus lines insurers to take-out blocks of policies from the state-run Citizens Property Insurance Corp. appears to be dead, after the Senate voted 21-to-18 to add a poison pill amendment that would require policyholders give consent before their policies could be transferred, Insurance Journal is reporting.
Under H.B. 245 — which passed the Florida House Feb. 3 by a 66-48 margin and is sponsored in the Senate by Banking and Insurance Committee Chairman Garrett Richter, R-Naples — E&S insurers would be permitted alongside admitted market insurers to assume homeowners policies from Citizens after giving 30 days of notice to affected policyholders. To qualify, the surplus lines insurer must have at least $50 million of surplus, a financial strength rating of A- or better from A.M. Best Co. and the ability to cover at least two 1-in-100 year hurricanes in a season.
But the amendment from Sen. Thad Altman, R-Melbourne, would limit the surplus lines take-outs to customers who affirmatively opt-in to the program after receiving detailed written explanations about differences between the carriers. Unlike traditional admitted market insurers, surplus lines carriers do not generally face rate regulation. They also are ineligible for participation in the Florida Insurance Guaranty Association.
Richter told the Miami Herald the amendment would discourage surplus lines insurers from entering the Florida market:
“They’re not going to come in,” he said. “If they want to take 30,000 policies out, they’ve got to get 30,000 signatures… They’ll just move their capital and go to another state.”
The bill was temporarily postponed early March 6, after senators approved the amendment late March 5. The 2012 Florida Legislative Session is set to adjourn March 9.