Florida legislation could move consumers from Citizens Property Insurance to more risk surplus lines.

Florida InsuranceIt is no secret that the Florida Citizens Property Insurance group is under financial stress. The state-run insurance company has offered affordable insurance policies to Floridians for decades. This affordability has attracted thousands of consumers, making Citizens the largest insurer in the state, but it has also come at a cost. The insurer now has more policies than it can handle efficiently and is not generating enough revenue to continuing operating viably. State legislators have been working on a way to trim the number of policies covered by the company. Last week, lawmakers passed a bill that could accomplish this feat.

The Florida House approved a bill that would move a significant number of policies from Citizens to auxiliary surplus lines. These surplus insurers are not privy to the same regulations governing the state’s other insurance companies. The bill is on its way to the state’s Senate. If approved and signed into law, consumers may be facing much higher insurance rates and may be exposed to significant risks.

Critics of the legislation claim that surplus lines insurers often do not have enough capital to pay claims that are related to major natural disasters. Given that Florida is prone to strong storms and faces constant risk of hurricanes, this may present a major problem to consumers living in areas that are often subjected to these disasters. The bill’s proponents claim that it is an effective way to make Citizens more viable and secure its future, but the costs associated with the bill may outweigh the benefits it could potentially bring.

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