Posted on 04 May 2009
On Friday the Florida Legislature gave final approval to critical legislation returning surplus lines insurers to the regulatory treatment that they have historically enjoyed, according to the American Insurance Association (AIA).
The legislation, HB 853, responds to recent adverse court decisions by the Florida Supreme Court and the Eleventh Circuit Court of Appeals, subjecting Florida surplus lines insurers to many of the same regulatory requirements as admitted lines. The bill reinstates surplus lines’ specific statutory exemption, retroactive to the date (October 1, 1988) when the surplus lines exemption was first added to state law. The only exception is for lawsuits that have been filed in the interim, up and until May 15, 2009. The bill also provides some limited consumer protections to surplus lines policyholders in the form of new disclosures and codification of existing case law regarding attorney fees.
“Surplus lines insurers are a key provider of property and casualty coverage in Florida,” said Cecil Pearce, AIA vice president of state affairs, “especially in the commercial market, where the majority of surplus lines policies are written. It was imperative that the Legislature act this session to clarify that contrary to recent court decisions, there is a specific exemption for surplus lines from the regulatory requirements of the admitted market. Passage of this legislation is also a victory by insurers and the state’s business community over the trial bar, who saw the court decisions as an invitation to endless litigation against surplus lines insurers whose policies suddenly were required to meet requirements that had previously applied only to admitted insurers.”
Florida ranks as the fourth largest state in terms of surplus lines business, behind California, Texas and New York. Florida’s 165 surplus lines insurers wrote over 700,000 policies in 2008, accounting for over $4 billion of premiums.