With no debate and little discussion, a final Florida House committee on Tuesday approved a bill that would set up a clearinghouse to help move commercial policies out of Citizens Property Insurance Corp. and into surplus lines carriers.
The House Commerce Committee, the final stop before a House floor vote, adopted a “strike-all” amendment to the bill after state regulators and some insurance brokers and agents had raised concerns in recent weeks.
But the approved version incorporates few of the changes that agents and Insurance Commissioner Michael Yaworsky had hoped for—despite words from the bill sponsor that indicated otherwise.
“What we’re offering in the strike-all is very generous in terms of more oversight” that the state Office of Insurance Regulation would have, said state Rep. Mike Redondo, a Miami plaintiffs’ attorney by profession.
Yaworsky did not speak at the committee meeting. He had a scheduling conflict, but he had met earlier with Redondo and other lawmakers to express his concerns, said Kylie Mason, communications director for OIR.
Those concerns were not heeded by the committee.
“Most of the improvements are illusory and the legislation is totally inconsistent with the way insurance is regulated across the United States, including Florida,” Mason said in an email. “Continued improvements are necessary.”
Yaworsky’s team had recently drafted its own version of the clearinghouse bill, one that would give OIR more authority over which insurers can participate and who would manage the program. The bill adopted Tuesday includes almost none of those ideas. Redondo’s final, amended version is very similar to the Senate bill sponsored by Sen. Joe Gruters, which is scheduled for a floor vote as early as late today, Wednesday.
It’s likely that the House version would be incorporated into the Senate bill, SB 1028, at some point. That leaves little opportunity for Yaworsky’s safeguard suggestions to be added before the legislative session is set to end March 13.
The House Commerce Committee’s amended bill and the Senate bill have sparked outrage for some in the industry, mostly because the measures would give a program administrator, such as a brokerage, authority to decide which insurers and which brokers can participate and seek takeouts of Citizens’ commercial policies. It favors surplus lines carriers, while Yaworsky’s version would have required admitted carriers to be included.
Some Florida brokers have said the bill appears to be written to favor one large, national broker, Ryan Turner, the head of which has been a heavy donor to Republican causes. Ryan Turner also has sent multi-page presentations on the proposed clearinghouse plan to lawmakers in recent weeks.
Other brokers and agents have said a commercial clearinghouse is unnecessary, thanks to a rejuvenated Florida market that is functioning as it should be.
Yaworsky’s proposed version would have some guardrails: It would mandate that the administrator be based in Florida and be “free of all potential conflicts of interest.” That could potentially exclude Ryan Specialty, which is headquartered in Chicago.
Gruters and Redondo’s version would set no parameters on what fees or surcharges a clearinghouse manager may charge—only that the charges be considered “fair.” Yaworsky’s bill would limit fees to $100 per policy.
The approved bill also leaves in an equalization adjustment, which could force Citizens to raise its premiums to match surplus lines’ offers. That may allow takeouts even if the prospective carrier is not within 20% of Citizens’ premiums, as is now required by statute.
Citizens’ officials have not publicly taken a position on the bill. But sources said that people in and out of the state-created insurer are concerned about what impact the clearinghouse, as framed in the bill, could have on Citizens’ depopulation plan.
While the number of commercial and commercial residential Citizens policies at issue is relatively small and getting smaller—less than 6,200 as of early this year—the stakes are high for insurance agents and brokers who place commercial policies in the state. Data from Citizens show that the total insured value of Citizens’ commercial policies in the state is more than $25 billion.
Policies in Miami-Dade and Palm Beach counties together total almost $11 billion in value, the data show.
Redondo could not be reached by Insurance Journal after the meeting Tuesday.
Top photo: Redondo at the committee meeting Tuesday (The Florida Channel).
Read more about the clearinghouse bills:
Florida’s Commercial Clearinghouse Bill Stirring Up Concerns for Brokers, Regulators
Florida Commissioner Offers Major Changes to Citizens’ Commercial Clearinghouse Plan
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Florida
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