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Citizens Property Insurance Corporation could be dropping support for its independent agents, should a controversial proposal by its chairman gain more traction.

On Wednesday, chairman of the board of governors Carlos Beruff resubmitted his proposal to cut independent agents out of Citizens’ policy underwriting and sales process. The board then instructed company staff to research financial information from large companies that directly sell insurance over the internet.

Beruff had first proposed the idea to cut independent agents from policy sales and underwriting in January, but it was met with opposition from agents and other industry executives.

According to Beruff, paying commissions to agents helps increase the company’s policy count. But if Citizens takes on too many policies when a natural disaster hits Florida, its claims-paying capacity could be overwhelmed, and all insurance customers in the state would have to be assessed to balance the deficit, Beruff and other officers and legislators warned.

Citizens has about 700,000 policies as of September 18, and is expected to reach or exceed 765,000 by the end of 2021.

As an insurer of last resort for the state of Florida, Citizens’ success as a non-profit insurer relies on its ability to prevent business growth and to transfer policies to private insurers. But Citizens’ consumers significantly grew in recent times, either due to private insurers raising their rates considerably, or dropping coverage altogether for older homes and/or areas with high claims rates – issues that have been linked to exacerbating severe weather and mounting insurance fraud cases in the state.

Read more: Florida homeowners face spike in insurance renewals

Citizens president and CEO Barry Gilway objected against the proposal and disagreed with Beruff’s argument that cutting out agents would reduce the insurer’s policy count. He also opposed the idea that agents were an unnecessary expense, pointing out that Citizens’ 7% commission is significantly lower than the 11%-12% that agents get through private insurers, which should also dissuade agents from placing consumers with Citizens. However, the majority of Citizens’ board members overrode the president.

South Florida Sun Sentinel reported that Citizens relies on approximately 7,500 independent agents from 2,500 agencies to exclusively sell its windstorm and property insurance to customers who are unable to obtain coverage elsewhere. Florida’s legislature would have to approve Citizens’ switch to a direct sales model.

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