Senators approved a bill, SB 578, by a 7 to 3 vote Wednesday because they're hoping the change will help shrink the size and financial risk of state-backed Citizens Property Insurance, the largest home insurer in Florida.
The goal is shared by Gov. Rick Scott, who asked Citizens on Tuesday to survey its policyholders to see how many understand they would be subject to paying up to 45 percent of their premium if a major hurricane strikes and wipes out Citizen's claims-paying funds.
Automobile and property insurance policyholders who are not with Citizens would also have to pay some fees if that happens.
Sen. Mike Fasano, R-New Port Richey, raised questions and sharp criticism about the bill. He said in the past, some homeowners who didn't realize they had surplus lines insurers didn't know why their premiums doubled or tripled. Surplus lines insurers' rate hikes don't require approval by state regulators and unlike fully regulated insurers, their policyholders can't tap the Florida Insurance Guaranty Association, which handles claims for insolvent insurers.
The committee approved a change Fasano proposed that would require surplus lines insurers to explain to consumers any significant differences between the their policy and the Citizens policy before the switch.
The bill already did that, noted Sen. Garrett Richter, and the change effectively took out a requirement that surplus lines insurers inform policyholders that they're not covered by FIGA.
Richter, R-Naples, who proposed the bill, emphasized that Citizens policyholders don't have to switch if they don't want to and they can always go back to Citizens if something goes wrong.
The committee did not pass Fasaso's proposal to require consumers to sign a form agreeing to opt out of Citizens.
Sen. Don Gaetz, R-Niceville, the next Senate President, said it shouldn’t be a Citizens policyholder's choice whether to keep a state-subsidized form of insurance.