Surplus Lines: Depopulation Participation and Its Impact on Non-Primary Residences

Aug 21, 2024, 00:00 AM by Kim Mask

Due to recent legislative changes (HB 1503), effective as of July 1, 2024, approved surplus lines insurers – that meet specified criteria and are approved by the Office of Insurance Regulation (OIR) – may now participate in depopulation. Policies that are eligible for assumption by an approved surplus lines insurer are limited to those that provide coverage for a non-primary residence that does not have a homestead exemption.

Currently, there are no approved surplus lines insurers. In anticipation of the future approval of surplus lines insurers by the OIR, Citizens has updated the application and PolicyCenter®. Until a surplus lines insurer is approved by the OIR, all references to “approved surplus lines insurers” are not applicable.

Once surplus lines insurers have been approved and are participating, offers they make through depopulation or other renewal offers that are not more than 20% greater than Citizens’ new or renewal premium, as applicable, for comparable coverage will make the applicant ineligible for a Citizens policy and a policyholder ineligible for a renewal policy.

Note: Approved surplus lines insurers will not select primary residences for depopulation.

An approved surplus lines insurer is defined by statute as follows:

Has a financial strength rating of A- or higher from A.M. Best Company
Has a Personal Lines residential risk program that is managed by a Florida resident surplus lines broker
Applies to OIR to participate in the assumption process to offer coverage to applicants for new coverage from Citizens or current policyholders of Citizens through an assumption plan approved by OIR
Does not, as part of any assumption plan approved by OIR, offer coverage on any Personal Lines residential risk that is a primary residence or has a homestead exemption under chapter 196
Files rates for review as part of an assumption plan with OIR. The OIR shall review whether the premium is more than 20% greater than the premium for comparable coverage from Citizens.
Provides data to OIR related to coverage and rates in a format promulgated by the commission

PolicyCenter Updates

The Pre-Qualification Questions on the Policy Type Questions screen in PolicyCenter.

PolicyCenter's Pre-Qualification Questions on the Policy Type screen.

Figure 1: PolicyCenter's Pre-Qualification Questions on the Policy Type screen

The Required Documents screen is updated to include Offer of Coverage B as a required document when B is selected from the Pre-Qualification Questions in PolicyCenter.

PolicyCenter's Required Documents screen.

Figure 2: PolicyCenter's Required Documents screen

Application Updates

The following sections of the new-business application are updated to include the approved surplus lines insurer verbiage:

Pre-Qualification Questions
Agent’s Certification
Applicant’s Agreement

The application edition date is updated to 07 24.

Performance Violation

When documentation uploaded in PolicyCenter does not meet Citizens’ eligibility requirements for primary residence or non-primary residence, a performance violation will be issued.

Performance Violation Notice: Ineligible Risk

Figure 3: Performance Violation Notice: Ineligible Risk

Resources

Select FAQs on the menu at the top of each page. Enter 20% in the Search field.

To review Citizens’ resources, log in to the Agents site. Select Personal > PR-M or PR-W, under the Spotlight section, and then select:

Manuals > Underwriting Guidelines, and the applicable policy type
Required Document Guides

To avoid performance violations, review the Agent Performance Standards Program Guide. Select Training > Performance Standards > Performance Violations.

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