Strategic Partnership
Introductory Email
Subject: Strategic Partnership – Dedicated Liability Product for Florida Tier 2 Solar
Body:
Dear [Recipient’s Name],
I’m reaching out to propose a strategic partnership that we believe aligns with your capabilities as an admitted general lines carrier.
As you know, the Florida Public Service Commission requires Tier 2 solar systems (10kW–100kW) to maintain $1 million in liability coverage as a condition of interconnection. Today, this obligation is being met with ill-fitted umbrella and homeowners endorsements, which are expensive, misaligned with the actual risk, and often cancelled after the first year. Utilities seldom re-verify coverage, leaving thousands of systems technically out of compliance.
In response, we have developed a turnkey solution: a dedicated, affordable liability product scoped precisely to the Tier 2 interconnection hazard. Our role is to serve as Program Manager, bringing product design, industry expertise, and distribution, in addition to providing a compliance database that gives regulators and utilities real-time visibility into coverage status. Your role would be to provide the admitted paper, file the form and rates with OIR, and hold the risk.
Attached is a detailed proposal that outlines the opportunity, economics, and five-year financial projections, including renewal incentives and stress-test scenarios. The structure is straightforward: we originate and manage the business end-to-end, while you retain a share of the economics for providing the admitted authority.
We believe this program represents a first-mover advantage in an underserved, recurring market that is expanding rapidly with Florida’s solar adoption. We would welcome the opportunity to review the proposed framework with you and discuss potential next steps.
Please let me know a convenient time for a call.
Respectfully,
[Your Name]
[Your Title]
Apollo Holdings
[Your Email] | [Your Phone]
Business Proposal
Strategic Partnership
Apollo Holdings
(Program Manager)
and
[Carrier Name]
(General Lines Carrier)
Proposal
The Florida Public Service Commission (PSC) requires all Tier 2 solar photovoltaic (PV) systems — installations greater than 10kW and up to 100kW — to carry $1 million in general liability coverage as a condition of interconnection. On paper, this is a straightforward requirement. In practice, it has become a compliance and cost headache for homeowners, businesses, and third-party system owners across the state.
Today, the market response has been to patch the requirement with broad liability products — typically through endorsements on homeowners (HO-3/HO-5) policies or umbrella policies layered on top. These are not fit-for-purpose. They over-insure unrelated risks, they cost two to four times more than the specific hazard justifies, and they are inconsistently applied. Some carriers cap policies at $400,000 or $500,000, essentially providing no coverage at all since it fails to meet the threshold, while others charge premiums that are prohibitively expensive. Worse, renewal attrition is high. Customers purchase these products once to satisfy the utility interconnection paperwork, then drop them at renewal because of cost. Utilities, which seldom re-verify coverage, are left with tens of thousands of interconnections technically out of compliance, despite a statutory obligation.
Florida’s solar market is booming. PSC data show that net-metering interconnections increased from 59,508 in 2019 to 292,284 in 2024 — a fivefold increase in five years, with 30,000 to 50,000 new systems being added annually. Nearly 300,000 Tier 2-eligible customers exist today, and every year that pool grows materially. Yet despite this scale, there is no dedicated liability product designed specifically to cover the Tier 2 interconnection hazard. The admitted carriers have chosen the path of least resistance, relying on umbrella pricing or refusing the risk, leaving customers, contractors, and utilities with an unsustainable solution.
Our proposal is to correct this misalignment by introducing a dedicated, affordable, and regulator-approved liability product for Tier 2 solar interconnections. The product is narrowly scoped to the specific hazard defined by the PSC rule: the possibility of injury to powerline workers in the event of a power outage and unintentional backfeed from an interconnected system to the grid. By limiting the coverage form to this hazard, we avoid the inefficiencies and cost imbalances of umbrella coverage and deliver a product that is actuarially transparent, easy for OIR to approve, and directly tied to the statutory requirement. Premiums scale proportionally with system size. For example, a 10kW system may be rated at $100 annually, while a 100kW system may be rated at $1,000. Renewal incentives are built into the rating structure, reducing the effective cost of continued coverage and encouraging long-term compliance rather than one-time paperwork fixes.
This product design is not theoretical. We have completed extensive due diligence. Our feasibility study documents the business plan, risk analysis, financial projections, and governance framework for such a program. Verified exhibits from the Florida PSC, the Florida OIR, NREL, IEEE, UL, and the International Energy Agency provide authoritative support for our findings. Industry safety literature, including Incident Prevention (2014), confirms that no lineworker injuries have been attributed to inverter backfeed, and PSC workshop transcripts show regulators acknowledge that systems under 250kW pose no material hazard. The actuarial package, prepared to regulatory standards, will support the rate filing and demonstrate that the empirical frequency of loss is extremely low. The result is a product that fills a clear market gap, with negligible historical loss exposure, and a regulatory narrative already supported by authoritative evidence.
Our role in this partnership is to act as Program Manager. We bring product design, industry expertise, technical infrastructure, and distribution. Specifically, we will manage product positioning and marketing through our contractor and system owner channels; maintain a compliance database/API that records every policy by premise and provides regulators and utilities with verification of coverage; and handle the operational side of distribution, policy issuance, and customer engagement. In effect, we are the brain and front-end of the program.
Your role, as the admitted carrier, is to provide the license and filing authority. You already hold a Certificate of Authority to transact liability insurance in Florida. Through this partnership, you would file the dedicated Tier 2 interconnection GL form and rate with OIR. Once approved, you would hold the policies on your books, with optional reinsurance support if needed. Statutory filings, FIGA participation, and regulatory oversight would remain with you, as they do with all admitted products. In exchange, you gain a book of new, recurring premium with low loss expectations and negligible correlation with your existing portfolio.
Economically, we propose an 80/20 split, with the Program Manager retaining 80 percent and the carrier retaining 20 percent. This structure reflects the fact that we are originating and managing the business end-to-end, while you are providing admitted paper, statutory filings, and regulatory compliance. We believe this to be a fair and sustainable long-term alignment. Both sides will have contributed to a structure that scales rapidly, compensates the carrier appropriately, and ensures the Program Manager is rewarded for creating and operating a turnkey solution.
The regulatory process is well defined. With your backing, the form and rate filing would be made under §627.410, F.S. Once approved by OIR, policies would be sold through licensed general lines agents, with our program acting as MGA. Policies and ACORD 25 certificates would be issued electronically to evidence compliance with PSC rules, identifying coverage by premise for verification by regulators and utilities. All data would be stored and tracked in the compliance database, ensuring that coverage status can be audited at any time by regulators or utilities. This transparency element is not available in the current market and solves the compliance attrition problem that utilities and regulators have identified.
This is more than a compliance exercise. It is a growth opportunity for both parties. For you, the carrier, it is an entry into an underserved, rapidly expanding market with recurring premium, low loss risk, and strong compliance optics. For us, as the Program Manager, it is the realization of a dedicated product that enables continued solar growth in Florida while addressing a regulatory pain point. Together, we can deliver a product that regulators, utilities, contractors, and customers all recognize as fit-for-purpose.
We propose that the next step is a strategic alignment call to review our feasibility study, actuarial package, and supporting exhibits in detail. From there, we can define revenue sharing, finalize program agreements, and prepare the OIR filing. With coordinated execution, the program can be brought to market within a 90-day window. The opportunity is clear, the market is ready, and the regulatory path is straightforward. This partnership positions both parties as first movers in a critical and growing sector.
Appendix – Renewal Pricing and 5-Year Pro Forma
Rationale for 50% Renewal Premium
The greatest weakness of the current market is not policy origination but renewals. Customers buy umbrella coverage once to satisfy interconnection paperwork, then cancel at renewal because premiums are misaligned with the actual risk. Utilities seldom re-verify, creating widespread attrition and leaving thousands of systems uncovered.
We propose a renewal structure where premiums are 50% of the first-year price. While this does not reflect a strict actuarial view of “full risk pricing,” it achieves what the PSC and OIR want: continuous coverage and transparent compliance. With discounted renewals, attrition is minimized. With our compliance database, regulators and utilities can confirm ongoing coverage in real time. The public interest is clear: continuous coverage at half price is far superior to a system where most customers lapse and no coverage exists.
Assumptions
First-year premium: $150 average per policy.
Renewal premium: $75 average per policy (50% discount).
New business: grows from 2,000 in Year 1 to 10,000 in Year 5.
Attrition: 2.5% annually years 1–4, then 2% thereafter.
Premium tax: 1.75% of gross premiums.
Admin expenses: $150,000 annually.
Loss frequency: negligible (Incident Prevention, 2014; PSC Workshop, 2020).
Investment income: 2% annually on surplus.
Revenue split: 85/15 (Program Manager / Carrier).
Table 1 – Policy Counts
Metric
Year 1
Year 2
Year 3
Year 4
Year 5
New Policies
2,000
3,500
5,000
7,500
10,000
Renewal Policies
0
1,950
5,363
10,105
16,646
Total In Force
2,000
5,450
10,363
17,605
26,646
Table 2 – Premiums and Net Income
Metric
Year 1
Year 2
Year 3
Year 4
Year 5
New Premiums
$300,000
$525,000
$750,000
$1,125,000
$1,500,000
Renewals (50%)
$0
$146,250
$402,225
$757,875
$1,248,450
Gross Premiums
$300,000
$671,250
$1,152,225
$1,882,875
$2,748,450
OIR Tax (1.75%)
($5,250)
($11,746)
($20,164)
($32,950)
($48,098)
Admin Expenses
($150,000)
($150,000)
($150,000)
($150,000)
($150,000)
Net Underwriting Income
$144,750
$509,504
$982,061
$1,699,925
$2,550,352
Investment Income (2% Surplus)
$20,000
$21,000
$23,000
$27,000
$35,000
Net Income
$164,750
$530,504
$1,005,061
$1,726,925
$2,585,352
Table 3 – Revenue Split (80/20)
Party
Year 1
Year 2
Year 3
Year 4
Year 5
Program Manager (80%)
$131,800
$424,403
$804,049
$1,381,540
$2,068,282
Carrier (20%)
$32,950
$106,101
$201,012
$345,385
$517,070
Appendix – Stress Test (Single Claim)
Table 4 – Net Income with One $1M Claim
Metric
Year 1
Year 2
Year 3
Year 4
Year 5
Base Case Net Income
$164,750
$530,504
$1,005,061
$1,726,925
$2,585,352
Less: One $1M Claim
($1,000,000)
($1,000,000)
($1,000,000)
($1,000,000)
($1,000,000)
Stress Net Income
($835,250)
($469,496)
$5,061
$726,925
$1,585,352
Table 5 – 80/20 Split of Stress Net Income
Party
Year 1
Year 2
Year 3
Year 4
Year 5
Program Manager (80%)
($668,201)
($375,597)
$ 4,049
$581,540
$1,268,282
Carrier (20%)
($167,050)
($93,899)
$1,012
$145,385
$317,070
Appendix – Multi-Claim Stress Test (Theoretical Only)
Table 6 – Net Income with Two $1M Claims in Year 5 (Theoretical Scenario)
Metric
Year 1
Year 2
Year 3
Year 4
Year 5
Base Case Net Income
$164,750
$530,504
$1,005,061
$1,726,925
$2,585,352
Less: Two $1M Claims
–
–
–
–
($2,000,000)
Stress Net Income
$164,750
$530,504
$1,005,061
$1,726,925
$585,352
Table 7 – 80/20 Split Under Two-Claim Stress
Party
Year 5 (Base)
Year 5 (Stress)
Program Manager (80%)
$2,068,282
$468,282
Carrier (20%)
$517,070
$117,070
Narrative
This scenario is presented for completeness only. It assumes two $1 million claims in the same policy year — an event that has never occurred in Florida or nationally. In this highly theoretical stress, net income in Year 5 drops from $2.59 million to $585,352. Even so, the Carrier retains $117,070 in profit, and the Program Manager retains close to $468,282.
The probability of such an event is effectively zero, but its inclusion demonstrates that the program is resilient even under extreme, historically unsupported scenarios.
Sources & References
Exhibit A-1 — Florida PSC Workshop Transcript (Sept. 17, 2020).pdf
Exhibit A-2 — Florida OIR – Olympus Insurance Filing No. 20-029187 (Withdrawn).pdf
Exhibit A-3 — Florida PSC – 2019-2024 Annual Net Metering Report (Statewide Totals).pdf
Exhibit A-4 — Incident Prevention (2014) – Lineworker Safety Article.pdf
Exhibit B-1 — IEEE 1547 Standard (Excerpts – Anti-Islanding Requirement).pdf
Exhibit B-2 — UL 1741 Standard (Excerpts – Inverter Certification).pdf
Exhibit B-3 — NREL Report (2017) – Anti-Islanding Laboratory Testing.pdf
Exhibit B-4 — IEA PVPS Study (2002) – Risk Assessment of Islanding.pdf
Program Feasibility and Actuarial Support
Dedicated Liability Product for Florida PSC Tier 2 Solar Interconnections
Prepared for:
[Carrier Name]
Admitted General Lines Insurer
Prepared by:
[Your Entity] (Program Manager / MGA)
Purpose:
This document provides program feasibility analysis, actuarial support, and financial projections in support of a new liability product filing under §627.410, Florida Statutes. The product is designed to provide $1 million in general liability coverage for Tier 2 solar photovoltaic (PV) systems, as required by the Florida Public Service Commission’s net metering rules.
Confidential – Prepared exclusively for discussion with [Carrier Name] and the Florida Office of Insurance Regulation.
Executive Summary
The Florida Public Service Commission requires Tier 2 solar photovoltaic (PV) systems, defined as installations greater than 10kW and up to 100kW, to maintain $1 million in general liability coverage as a condition of interconnection [Exhibit A-1]. While this requirement is clear on paper, the current market response has been inefficient and costly. Homeowners and businesses typically satisfy the obligation with umbrella policies or endorsements on homeowners’ policies. These solutions are ill-suited to the specific risk, overpriced relative to the exposure, and frequently cancelled at renewal, leaving a large share of interconnected systems without continuous coverage [Exhibit A-1].
Florida’s solar market is expanding rapidly, with cumulative interconnections increasing from 59,508 in 2019 to 292,284 in 2024, representing a fivefold increase in five years [Exhibit A-3]. Each year, 30,000 to 50,000 new systems are added, and yet there remains no dedicated insurance product that directly addresses the PSC requirement. The result is a widening compliance gap that undermines both regulatory oversight and utility worker safety [Exhibit A-1].
This program introduces a dedicated, regulator-approved liability product designed specifically for Tier 2 interconnections. The coverage is narrowly scoped to the PSC-defined hazard: liability arising from injury to powerline workers in the event of an outage and unintentional backfeed from an interconnected system [Exhibit B-1; Exhibit B-2]. Premiums scale proportionally with system size, and renewal incentives are incorporated by offering renewals at 50 percent of first-year premiums. This approach reduces attrition, promotes long-term compliance, and ensures that coverage compounds over time, creating a growing pool of insured systems.
Extensive due diligence underpins this program. Industry safety literature, including Incident Prevention (2014), confirms no lineworker injuries have been attributed to inverter backfeed [Exhibit A-4], and PSC workshop testimony has recognized that systems under 250kW pose no material hazard [Exhibit A-1]. Technical standards such as IEEE 1547 and UL 1741 mandate anti-islanding protections [Exhibit B-1; Exhibit B-2], making the probability of loss negligible. These findings support actuarial assumptions of minimal loss frequency while reinforcing the public interest rationale for ensuring continuous coverage at affordable rates.
Financial projections demonstrate that the program scales quickly, reaching more than 26,000 policies in force and $2.7 million in annual premium volume by Year 5 [derived from program projections supported by Exhibit A-3 for growth rates]. Even with renewal pricing set at 50 percent of new business premiums, net income exceeds $2.5 million annually by Year 5. Stress testing, including scenarios with one or two maximum-limit claims, confirms that the program remains solvent and profitable under extreme and historically unsupported conditions.
The economics are structured on an 80/20 split between Program Manager and Carrier. This reflects the Program Manager’s responsibility for product design, distribution, compliance technology, and operations, while the Carrier provides admitted authority, statutory filings, and regulatory oversight. This alignment ensures fair compensation for both parties while delivering a product that regulators, utilities, contractors, and consumers can all recognize as fit-for-purpose.
This program represents a first-mover advantage in an underserved, rapidly growing market. It provides the Florida Office of Insurance Regulation with a solution that enhances compliance, protects utilities and lineworkers, and ensures affordability for consumers, all within a transparent and auditable framework.
Section 1 – Introduction
The Florida Public Service Commission (PSC) has established clear rules requiring Tier 2 solar photovoltaic (PV) systems, defined as installations greater than 10kW and up to 100kW, to maintain $1 million in general liability coverage as a condition of interconnection [Exhibit A-1]. The purpose of this requirement is to mitigate the possibility of liability arising from injury to powerline workers in the event of a power outage and unintentional backfeed from an interconnected system to the grid [Exhibit B-1; Exhibit B-2].
In theory, this requirement ensures that utilities and their personnel are protected against a narrow but significant hazard. In practice, however, the obligation has been addressed by the market in a manner that is both inefficient and unsustainable. Homeowners and businesses are typically directed to umbrella policies or liability endorsements on homeowners’ policies, neither of which is designed for this specific purpose. These policies often over-insure unrelated risks, impose higher costs than the hazard warrants, and are inconsistently underwritten [Exhibit A-1].
The consequences of this misalignment are substantial. Many customers purchase coverage initially to meet interconnection requirements but subsequently allow it to lapse at renewal because of high premiums. Utilities seldom re-verify coverage, resulting in widespread attrition and leaving a significant portion of interconnected systems technically out of compliance with PSC rules [Exhibit A-1]. The intended continuity of protection for utility personnel is therefore undermined by structural flaws in the current approach.
At the same time, the growth of distributed solar in Florida has been extraordinary. PSC annual reports document a rise from 59,508 net-metered systems in 2019 to 292,284 in 2024, representing a fivefold increase in just five years [Exhibit A-3]. Each year, between 30,000 and 50,000 new systems are added, expanding the population of customers obligated under the liability requirement. This trend highlights both the scale of the compliance challenge and the opportunity for a dedicated, fit-for-purpose insurance solution.
This document presents a program designed to close the gap. It outlines the rationale, structure, and financial feasibility of a dedicated liability product for Tier 2 interconnections. The program is built on three central principles: scoping coverage narrowly to the PSC-defined hazard, pricing premiums proportionally to system size, and incentivizing renewals with discounted rates to ensure long-term compliance. Together, these principles transform the PSC requirement from a recurring compliance problem into a sustainable insurance solution that benefits regulators, utilities, carriers, and consumers alike.
Section 2 – Business Plan
Market and Target Insureds
The target market for this program consists of Florida homeowners, small businesses, and third-party owners or lessors of solar photovoltaic (PV) systems that fall within the PSC’s Tier 2 classification. These systems, greater than 10kW and up to 100kW in capacity, are contractually obligated through utility net-metering agreements to maintain $1 million in general liability coverage. The obligation is not optional: customers seeking to interconnect under the PSC framework must provide evidence of coverage as a condition of participation [Exhibit A-1].
Despite the scale of this market, there is no dedicated insurance product addressing this requirement. Most customers rely on umbrella liability policies or endorsements on homeowners’ policies. These approaches result in misaligned coverage and excessive premiums relative to the narrow interconnection risk. As premiums rise, customers frequently cancel at renewal, leaving utilities with growing compliance gaps. This creates an urgent need for a dedicated, affordable, and regulator-approved product that directly responds to the PSC requirement [Exhibit A-1].
Florida’s solar market provides significant scale for such a product. Between 2019 and 2024, the number of net-metering customers grew from 59,508 to 292,284, with 30,000 to 50,000 new interconnections added each year [Exhibit A-3]. This expanding base, combined with persistent compliance gaps, establishes both the business opportunity and the public policy rationale for the program.
Product Design and Operations
The program introduces a stand-alone general liability policy specifically designed for Tier 2 interconnections. Coverage is limited to liability arising from injury to powerline workers in the event of an outage and unintentional backfeed [Exhibit B-1; Exhibit B-2]. The insuring agreement is streamlined, avoiding the duplication of coverages already addressed under homeowners’ or umbrella liability policies.
Premiums are scaled proportionally with system size. A 10kW system may be rated at approximately $100 annually, while a 100kW system may be rated at $1,000. To reduce attrition and promote continuity of coverage, renewals are offered at a 50 percent discount to first-year premiums. This incentive ensures that customers maintain compliance year after year, creating a compounding insured pool rather than recurring lapses [Exhibit A-1].
Policies will be issued electronically, and ACORD 25 certificates will be generated to evidence compliance. The compliance database, maintained by the Program Manager, will record coverage status by premise and provide regulators and utilities with real-time verification capabilities. This approach relieves utilities of the burden of monitoring coverage and ensures transparency in a way that the current market does not provide [Exhibit A-1].
Program Manager and Carrier Roles
The Program Manager is responsible for product development, distribution, compliance technology, and program administration. Distribution will occur through solar contractors, digital channels, and partnerships with system owners and lessors. The Program Manager will also oversee policy issuance, customer communications, and database management.
The Carrier provides the admitted paper, files the form and rates with the Office of Insurance Regulation under §627.410, Florida Statutes, and holds the risk on its balance sheet. Statutory filings, FIGA participation, and regulatory oversight remain with the Carrier, as with all admitted products. The partnership ensures that both parties are compensated appropriately for their roles: the Program Manager for building and operating the program, and the Carrier for providing admitted authority and compliance infrastructure [Exhibit A-2].
Conclusion of Business Plan
This program transforms an underserved and problematic compliance obligation into a scalable insurance solution. By aligning coverage with the PSC-defined hazard, pricing proportionally to system size, and incentivizing renewals, the program ensures affordable and continuous protection. It strengthens compliance, addresses regulatory concerns, and creates recurring premium in a rapidly growing market [Exhibit A-3].
Section 3 – Risk Analysis
Background of Risk
The PSC requirement for Tier 2 net-metering customers to maintain $1 million in general liability coverage is intended to address the possibility of liability arising from injury to powerline workers in the event of a power outage and unintentional backfeed from an interconnected system [Exhibit A-1]. While this hazard is theoretically possible, the empirical frequency of loss associated with inverter backfeed is extremely low [Exhibit A-4].
Despite this, the insurance requirement is enforced contractually through net-metering agreements [Exhibit A-1]. Most customers meet the obligation with umbrella liability policies or endorsements on homeowners’ forms, both of which provide broad liability protection across exposures unrelated to the interconnection hazard. This results in a misalignment between coverage and risk: policyholders are charged for protections that are unnecessary, while the narrow statutory hazard remains unaddressed in a transparent and cost-effective way.
Historical Loss Experience
Industry safety literature supports the conclusion that the likelihood of injury from inverter backfeed is negligible. Incident Prevention (2014) reported that no lineworker injuries have been attributed to inverter backfeed, citing the effectiveness of mandatory anti-islanding protections [Exhibit A-4]. During the PSC’s 2020 workshop on customer-owned renewable generation, staff testimony confirmed that there was no identifiable electrical risk at Tier 2 system sizes and that systems under 250kW posed no material hazard to the grid or to workers [Exhibit A-1].
Although the hazard rarely manifests, the misalignment of coverage mechanisms produces renewal problems. Renewal premiums under umbrella and homeowners’ policies are disproportionately high relative to the narrow exposure contemplated by PSC rules [Exhibit A-1]. Policyholders often cancel coverage after the first year, and because utilities seldom re-verify, compliance erodes rapidly. This cycle leaves a growing share of interconnected systems without active liability coverage, undermining the continuity of protection intended by the PSC requirement.
Regulatory Context and Insurance Market Response
The PSC requires customers with systems greater than 10kW and up to 100kW to maintain $1 million in general liability coverage as a condition of participating in net metering [Exhibit A-1]. Utilities enforce this requirement at interconnection through customer agreements [Exhibit A-1].
The admitted market has not developed a fit-for-purpose product. Carriers typically avoid writing such a narrow risk because of limited premium potential, lack of historical claims data, and the administrative costs of form development. OIR’s rejection of Olympus Insurance Company’s proposed solar exclusion illustrates the regulatory expectation that coverage must remain available and not be broadly excluded without consumer options [Exhibit A-2]. Instead, customers are directed into products that are broader than necessary and priced inefficiently. This misalignment imposes unnecessary costs on consumers and contributes to widespread attrition at renewal.
The program described here is designed to address this gap by presenting a dedicated, transparent, and affordable liability product that aligns precisely with the PSC’s mandate. By limiting coverage to the defined hazard, pricing proportionally to system size, and structuring renewals with discounted pricing, the program restores integrity to the PSC’s rules while creating an economically viable solution for the Carrier and Program Manager.
Exposure Base and Growth
The exposure base is defined by the population of customers obligated under PSC rules to maintain liability coverage for Tier 2 interconnections. This population has grown rapidly, reflecting both the expansion of solar generation and the increasing size of systems installed to accommodate electric vehicle charging and rising energy costs.
PSC annual reports confirm the scale of this growth. Cumulative statewide net-metering interconnections rose from 59,508 in 2019 to 292,284 in 2024, representing a fivefold increase in five years [Exhibit A-3]. Each year, 30,000 to 50,000 new systems are added, distributed across investor-owned, municipal, and cooperative utilities. This scale ensures that the number of obligated insureds will continue to rise materially.
This trajectory underscores the importance of developing a coverage mechanism that ensures continuity beyond the first policy year. With discounted renewals and a transparent compliance database, this program is designed to convert the large and expanding exposure base into a sustainable insured pool that benefits all stakeholders.
Conclusion of Risk Analysis
The Tier 2 interconnection hazard is a theoretical risk that is tightly controlled by technical standards and inspection practices. Incident Prevention and PSC testimony confirm that no documented injuries have occurred [Exhibit A-1; Exhibit A-4], and technical standards such as IEEE 1547 and UL 1741 enforce protections that make islanding events virtually impossible [Exhibit B-1; Exhibit B-2]. While no claims have been identified, the PSC requirement remains in force, and a mechanism is needed to ensure affordable, continuous compliance.
The dedicated liability program proposed here achieves that goal. It scopes coverage to the statutory hazard, prices proportionally to system size, and introduces renewal incentives to sustain compliance. With a transparent compliance database, regulators and utilities can verify coverage in real time, creating accountability and reducing attrition. This approach transforms the liability requirement from an ongoing compliance challenge into a transparent, affordable, and sustainable insurance solution.
Section 4 – Financial Projections
Overview
The financial performance of this program is driven by rapid market growth, discounted renewal pricing to ensure continuity, and negligible loss frequency. Unlike umbrella or homeowners’ endorsements, which suffer from high attrition, this program is structured to sustain compliance year over year. The result is a compounding pool of insureds that scales quickly and delivers recurring premium to the Carrier and Program Manager.
Assumptions
The following assumptions underpin the projections:
Average first-year premium: $150 per policy.
Renewal premium: $75 per policy (50 percent discount).
New business: grows from 2,000 policies in Year 1 to 10,000 in Year 5.
Attrition: 2.5 percent per year in Years 1–4; 2 percent per year thereafter.
Premium tax: 1.75 percent of gross premiums.
Administrative expenses: $150,000 annually.
Loss frequency: negligible, consistent with industry literature and PSC testimony [Exhibit A-4; Exhibits B-1–B-2].
Investment income: 2 percent annually on surplus.
Revenue split: 80/20 (Program Manager / Carrier).
Policy Counts
Metric
Year 1
Year 2
Year 3
Year 4
Year 5
New Policies
2,000
3,500
5,000
7,500
10,000
Renewal Policies
0
1,950
5,363
10,105
16,646
Total In Force
2,000
5,450
10,363
17,605
26,646
Premiums and Net Income
Metric
Year 1
Year 2
Year 3
Year 4
Year 5
New Premiums
$300,000
$525,000
$750,000
$1,125,000
$1,500,000
Renewal Premiums (50%)
$0
$146,250
$402,225
$757,875
$1,248,450
Total Premiums
$300,000
$671,250
$1,152,225
$1,882,875
$2,748,450
Premium Tax (1.75%)
($5,250)
($11,746)
($20,164)
($32,950)
($48,098)
Admin Expenses
($150,000)
($150,000)
($150,000)
($150,000)
($150,000)
Net Underwriting Income
$144,750
$509,504
$982,061
$1,699,925
$2,550,352
Investment Income (2% Surplus)
$20,000
$21,000
$23,000
$27,000
$35,000
Net Income
$164,750
$530,504
$1,005,061
$1,726,925
$2,585,352
Revenue Split (80/20)
Party
Year 1
Year 2
Year 3
Year 4
Year 5
Program Manager (80%)
$131,800
$424,403
$804,049
$1,381,540
$2,068,282
Carrier (20%)
$32,950
$106,101
$201,012
$345,385
$517,070
Stress Test – Single Claim
Metric
Year 1
Year 2
Year 3
Year 4
Year 5
Base Case Net Income
$164,750
$530,504
$1,005,061
$1,726,925
$2,585,352
Less: One $1M Claim
($1,000,000)
($1,000,000)
($1,000,000)
($1,000,000)
($1,000,000)
Stress Net Income
($835,250)
($469,496)
$5,061
$726,925
$1,585,352
Stress Test – Two Claims (Theoretical Only)
Metric
Year 5 (Base)
Year 5 (Stress, 2 Claims)
Net Income
$2,585,352
$585,352
Program Manager (80%)
$2,197,549
$497,549
Carrier (20%)
$387,803
$87,803
Conclusion of Financial Projections
The five-year projections show that the program scales quickly, generating more than $2.5 million in annual net income by Year 5 while maintaining affordability and compliance. Even under extreme stress scenarios, including two maximum-limit claims in a single year, the program remains solvent and profitable. This confirms that the design is conservative, sustainable, and aligned with the interests of regulators, utilities, consumers, and both program partners.
Section 5 – Program Operations
Organizational Structure
The program is administered through a partnership between the Program Manager and the Carrier. The Program Manager is responsible for product design, distribution, compliance technology, and ongoing administration. The Carrier, as an admitted general lines insurer, files the product with the Office of Insurance Regulation under §627.410, holds the risk on its balance sheet, and performs all statutory reporting and compliance functions [Exhibit A-2]. This alignment ensures that regulatory obligations remain with the Carrier while the Program Manager delivers the market expertise, infrastructure, and operational support needed to scale the program.
Policy Issuance and Administration
Policies are issued electronically upon receipt of premium. ACORD 25 certificates are automatically generated to evidence compliance with PSC requirements [Exhibit A-3]. The certificates identify coverage by premise, allowing utilities and regulators to verify that active coverage is in place for any interconnected system. Premiums are collected annually and deposited into the Carrier’s account, with revenue sharing between the Program Manager and Carrier allocated under the agreed split.
The Program Manager maintains a compliance database that records each policy by customer and premise. Regulators and utilities may access the database through a web portal or API, ensuring that coverage can be verified in real time. This creates transparency and reduces the administrative burden on utilities, which currently lack any reliable system for monitoring renewals [Exhibit A-1].
Claims Handling
Although the likelihood of a claim is negligible, the program maintains a credible claims-handling process. Claims are reported directly to the Carrier and administered by a third-party administrator. The administrator is responsible for investigating, adjusting, and resolving claims in accordance with industry standards. Reserves are established as necessary, and the Carrier retains oversight of all claim outcomes. This ensures regulatory compliance and maintains the credibility of the program in the unlikely event of a loss [Exhibit A-4].
Compliance and Oversight
The Carrier complies with all statutory requirements applicable to admitted general lines insurers in Florida, including annual reporting, premium tax payments, and participation in FIGA. The Program Manager provides operational transparency through the compliance database, detailed reporting, and ongoing communication with the Carrier. This division of responsibilities ensures that both partners are positioned to perform their roles effectively, with the Carrier maintaining its regulatory obligations and the Program Manager ensuring efficient program execution [Exhibit A-2].
Conclusion of Program Operations
This program replaces an inefficient and unsustainable market response with a transparent, affordable, and regulator-aligned liability solution. By combining the Carrier’s statutory authority with the Program Manager’s product expertise and operational framework, the program delivers compliance, scalability, and profitability. The structure provides regulators, utilities, and consumers with a product that is fit-for-purpose while aligning incentives for long-term success.
Section 6 – Conclusion
The PSC’s Tier 2 liability requirement is a straightforward mandate that has been poorly served by the existing market. Customers are currently forced into umbrella and homeowners’ policies that are overpriced, misaligned with the actual hazard, and subject to high attrition at renewal. Utilities seldom re-verify coverage, leaving compliance gaps that undermine the intent of the PSC rule.
At the same time, Florida’s solar market is growing at unprecedented rates. With nearly 300,000 interconnected systems statewide and 30,000 to 50,000 new interconnections annually, the scale of the opportunity is significant [Exhibit A-3]. A dedicated, regulator-approved liability product addresses this gap by scoping coverage narrowly to the PSC-defined hazard, pricing proportionally to system size, and incentivizing renewals with discounted rates to ensure long-term compliance.
The program is supported by industry evidence, regulatory precedents, and technical standards that confirm the negligible likelihood of loss. Industry safety literature reports no lineworker injuries attributed to inverter backfeed [Exhibit A-4], and technical standards (IEEE 1547; UL 1741) mandate anti-islanding protections that materially limit the hazard [Exhibit B-1; Exhibit B-2]. Regulatory precedent also demonstrates OIR’s posture regarding improper solar exclusions [Exhibit A-2]. Financial projections demonstrate that the program is profitable, scalable, and resilient even under stress scenarios. The revenue-sharing structure ensures that both the Carrier and the Program Manager are compensated fairly for their respective contributions.
This program provides the Florida Office of Insurance Regulation with a solution that enhances compliance, protects utilities and lineworkers, and ensures affordability for consumers. For the Carrier, it represents a first-mover advantage in a large and expanding market, generating recurring premium with minimal loss exposure. For the Program Manager, it delivers on the promise of a transparent and sustainable compliance solution that addresses a pressing regulatory need.
The next step is to finalize the partnership between Carrier and Program Manager, prepare the form and rate filing under §627.410, and present the program to OIR. With coordinated execution, the program can be brought to market within 90 days, delivering a product that is practical, profitable, and aligned with the public interest.
References & Sources
Appendix A – Regulatory Evidence
Exhibit A-1 – Florida PSC Workshop Transcript (Sept. 17, 2020)
Customer-Owned Renewable Generation Workshop Transcript
Florida Public Service Commission
Docket No.: 20200000 (Undocketed Filings for 2020)
Document No.: 09781-2020 (filed October 1, 2020)
Key excerpts: Chairman Clark’s question; PSC staff testimony confirming no identifiable electrical risk at Tier 2 system sizes and recognition that systems under 250kW pose no material hazard.
Exhibit A-2 – Florida OIR – Olympus Insurance Filing No. 20-029187 (Withdrawn)
Olympus Insurance Company – Solar Energy Systems Exclusion (Form OL HO 05 24 12 20)
Filing No.: 20-029187
Date Filed: November 12, 2020
Date Closed: December 17, 2020
Final Action: Withdrawn at the requirement of OIR
Contents: policy form, OIR correspondence requiring buy-back option, withdrawal letter.
Exhibit A-3 – Florida PSC Annual Net Metering Reports (2019–2024)
Interconnection and Net Metering of Customer-Sited Renewable Generation (Rule 25-6.065(10), F.A.C.)
Filing dates: April–June of the following year
Coverage period: Years ending Dec. 31, 2019–2024
Key figures: cumulative statewide totals grew from 59,508 in 2019 to 292,284 in 2024, with 30,000–50,000 new interconnections annually.
Exhibit A-4 – Incident Prevention (2014) – Lineworker Safety Article
Distributed Generation Safety for Lineworkers – Incident Prevention magazine
Author: Mike Caro, CUSP
Date Published: July 15, 2014
Key Quote: “There has never been a known injury to a lineworker from backfeed onto a line from a DG facility associated with an inverter failure.”
Appendix B – Technical Standards
Exhibit B-1 – IEEE 1547 Standard (Excerpts – Anti-Islanding Requirement)
A Primer on the Unintentional Islanding Protection Requirement in IEEE Std 1547-2018
National Renewable Energy Laboratory (NREL), Technical Report NREL/TP-5D00-77782 (April 2022)
Excerpts: Clause 8.1 anti-islanding protections (≤2-second trip requirement).
Exhibit B-2 – UL 1741 Standard (Excerpts – Inverter Certification)
Validating the Test Procedures Described in UL 1741 SA and IEEE P1547.1
National Renewable Energy Laboratory (NREL), Conference Paper NREL/CP-5D00-71453 (May 2018)
Confirms UL 1741 SA procedures validate anti-islanding, ride-through, volt-var, and frequency-watt performance.
Exhibit B-3 – NREL Report (2017) – Anti-Islanding Laboratory Testing
Advanced Grid Support Functionality Testing for Florida Power and Light
National Renewable Energy Laboratory (NREL), Technical Report NREL/TP-5D00-67577 (January 2017)
Prepared for FPL; validates inverter anti-islanding and related protections in lab conditions.
Exhibit B-4 – IEA PVPS Study (2002) – Risk Assessment of Islanding
Probability of Islanding in Utility Networks due to Grid Connected Photovoltaic Power Systems
International Energy Agency – PVPS Task V, Report IEA-PVPS T5-07:2002 (September 2002)
Concludes the probability of islanding is “virtually zero” and well below 10⁻⁶ to 10⁻⁵ annually in low-voltage networks.