Industry Insight: Citizens Commercial Clearinghouse Stalls Amid OIR Review

Background: A Statutory Deadline Meets a Regulatory Roadblock

Florida's push to create a clearinghouse for Citizens Property Insurance Corporation commercial policies has run into trouble, with little time left before a January deadline set by statute. At the Citizens Board of Governors meeting on Wednesday, Board Chairman Carlos Beruff signaled that the program would be reworked.

According to reporting by Insurance Journal, Beruff said, "I looked at the numbers and the numbers make no sense and the implementation makes no sense." He added that the board would go back to the drawing board before bringing forward a policy that Citizens can afford and that does not continue to increase costs for ratepayers. He did not detail what changes are needed or what prompted his concerns.

The OIR Letter

Beruff's comments came a week after Deputy Florida Insurance Commissioner Jane Nelson sent a letter to Citizens' general counsel. The letter points out that Senate Bill 1028, signed into law in June, requires Citizens to amend its governing document, the Plan of Operation, before it establishes the clearinghouses.

Nelson wrote that Citizens has neither the Plan of Operation amendment nor administrator contracts in place. As a result, Citizens has not been able to submit all of the documents the Office of Insurance Regulation (OIR) needs to complete its review. The letter says OIR has requested information to cure deficiencies and has not yet received satisfactory responses. It concludes that OIR is unable to approve the clearinghouse program at this time.

Where the Program Stands

• Citizens is finalizing a contract with the winning bidder, a Brown & Brown subsidiary, to administer one of the commercial clearinghouses required by the law.
• The platform is intended to help brokers and agents move more Citizens policies to surplus lines insurers.
• OIR must review the plans before the clearinghouses can be set up.
• The firms chosen to manage the platforms are Brown & Brown's Bridge Specialty Group (BSG) and Exzeo.

Timing and Procedural Hurdles

Even if the board amends its Plan of Operation, the process could take time and could open the door to other changes in Citizens' operations. After board approval, the Florida Financial Services Commission, which includes the governor and other top state officials, would also have to review the changes.

All of that may not be achievable before the Jan. 1 deadline in the clearinghouse law. If Citizens were to challenge OIR's position, that could consume even more time. Citizens' attorney, Brian Newman, wrote to Nelson on Sept. 16 that he did not expect to see a notice of rights attached to the letter, suggesting Citizens has the right to challenge the decision.

Competing Readings of the Situation

Insurance Commissioner Michael Yaworsky had initially opposed parts of the clearinghouse bill as it moved through the Legislature this spring. A number of insurance agents have said the platform is unnecessary in a rapidly improving Florida market where more primary carriers are writing more policies. Some sources in the Florida insurance arena speculated that the Sept. 15 letter may give Citizens' officials a way to quietly delay or kill the plan. Others described it as a difference of opinion on the intent of the new law, one that OIR and Citizens may be able to resolve through compromise in coming weeks.

Impact on Public Adjusters and Claims Professionals

This is a policy and regulatory story rather than a court ruling, but it matters to the people who handle commercial property claims in Florida.

• Policy placement may shift. If the clearinghouse moves forward, more commercial Citizens policies could move to surplus lines carriers. Surplus lines policies often carry different forms, endorsements and claim procedures than admitted-market policies. Adjusters should be ready to read each policy on its own terms.
• Uncertainty for commercial insureds. Clients with Citizens commercial coverage may ask whether their policy will be moved. The answer is unsettled, and PAs should avoid predicting outcomes.
• Watch the regulatory record. Plan of Operation amendments, OIR determinations and any challenge by Citizens will shape how and when the program launches, if it does.

Practical Takeaways

• Confirm the carrier and policy form at the start of every commercial loss, since the carrier may change at renewal.
• Review notice, proof-of-loss and dispute-resolution provisions carefully when a policy is written on a non-admitted basis.
• Track Citizens board and OIR communications, which will show whether the Jan. 1 deadline holds.
• Document coverage communications with clients so any mid-term or renewal changes are clear.

How Louis Law Group Can Help

Louis Law Group represents Florida policyholders and works alongside public adjusters on disputed property claims, including commercial losses. If a carrier transition, coverage question or claim denial is complicating a case, our team can review the policy and the claim file. Call us at (833) 657-4812 to discuss your situation.

Source: Insurance Journal - Florida's Commercial Clearinghouse Plan Hits a Snag, With OIR and Board Concerns