Florida’s Citizens Property Insurance Advises Agents of Statutory Maximum Coverage Limit Decrease

 

As required by Senate Bill 1770 enacted in 2013, Florida’s Citizens Property Insurance Corporation (“Citizens”) advised its agents today, July 27, 2016, that it will decrease allowable maximum policy coverage limits effective January 1, 2017 for new and renewal business.  

As of that date, the following personal residential risks will no longer be eligible for Citizens coverage under Florida law:

• A structure that has a dwelling replacement cost (Coverage A) of $700,000 or more
• A single condominium unit with a combined dwelling and contents replacement cost (Coverage A and C) of $700,000 or more
• A tenant contents policy with a Coverage C limit of $700,000 or more

Note:  The maximum coverage limit changes reflected above will not affect policy forms where lower maximum coverage limits already exist.

Because the Florida Office of Insurance Regulation has determined there is not a reasonable degree of market competition in Miami-Dade and Monroe counties, these two counties are exempt from the decreased coverage limit of $700,000.  The maximum coverage limit of less than $1 million will continue to apply to risks in these two counties.

Citizens will comply with the nonrenewal guidelines in Florida Statute 627.4133 and mail affected policyholders nonrenewal notices in advance of nonrenewal dates of January 1, 2017 or later. The nonrenewal will be effective at the end of each policy’s current term.

Agency principals soon will receive a separate email containing a list of affected policyholders, in order to assist them with securing coverage elsewhere.

Citizens’ Web site, systems and manuals will be updated to reflect this change.

 

Citizens-Related Provisions in SB 1770 (for the complete bill summary, click here):

• Exempts Citizens from “exchange of business” restrictions to facilitate the operations of the clearinghouse.
• Adds a professional structural engineer to the Florida Commission on Hurricane Loss Projection Methodology.
• Reduces the maximum Citizens’ policy limit from $2 million to $1 million and further reduces this amount by $100,000 a year for 3 years to $700,000. Allows for an exemption in certain counties in which the Office of Insurance Regulation (OIR) determines do not have a reasonable degree of competition.
• Prohibits Citizens from covering structures commencing construction after July 1, 2014, seaward of the coastal construction control line.
• Allows the Governor of Florida to appoint a consumer representative to the Citizens Board of Governors in addition to the current two appointments.
• Clarifies a private company’s offer within 15 percent of Citizens’ rate for a new policy and no greater than the current rate for a renewal makes the policy ineligible for coverage with Citizens.
• Requires that Citizens disclose potential surcharge and assessment liabilities with each renewal notice.
• Allows insurers who take policies out of Citizens to use Citizens’ policy forms for 3 years without approval from the OIR to use the forms.
• Establishes an office of Inspector General at Citizens to be appointed by the Financial Services Commission.
• Requires Citizens to prepare an annual report on Citizens’ loss ratio for non-catastrophic losses on a statewide and county basis.
• Subjects Citizens to the purchasing of commodities restrictions under s. 287.057, F.S.
• Establishes the Citizens clearinghouse by January 1, 2014.
• Requires the establishment of a process to divert commercial residential policies.
• Requires that companies participating in the clearinghouse must either appoint the agent of record or offer a limited servicing agreement.
• Requires that agents are to be paid Citizens commission or the company’s standard commission, whichever is greater.
• Clarifies that the 45-day notice of nonrenewal applies to policies submitted to the clearinghouse.
• Provides that independent and captive agents are granted and must maintain ownership of records including policies placed in Citizens.
• Allows captive companies to approve their agents limiting servicing agreements with each participating company.
• Requires Citizens to submit to the Legislature and Financial Services Commission an annual probable maximum loss report for the upcoming storm season. 

 

 

Should you have any questions or comments, please contact Colodny Fass.

 

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