Industry Issues | Surplus Lines Reform

Florida Surplus Lines Legislative Update

Florida - UPDATE

Insurance Omnibus: SB 784 (Brandes) and HB 465 (Santiago)

SB 784 was substituted for HB 465. HB 465 passed the Senate on March 9, 2018. It has BEEN ENROLLED AND sent to the governor for his signature, but when it is he will have thirty days after the end of session to act. Effective Date: upon becoming a law. 

As it relates to surplus lines, section 4 of the bill repeals paragraph (a) of subsection (2) of section 626.918, a requirement that conflicted with federal law relating to the surplus lines insurer eligibility process. All surplus lines insurer applications will now go straight to Office of Insurance Regulation.

An adopted floor amendment to the bill removed a provision that would have amended s. 626.914, F.S., revising the definition of the term "diligent effort" to decrease the replacement cost threshold for a residential structure for purposes of proving rejection of coverage by authorized insurers.

HB 465 makes multiple changes to the Florida insurance statutes in the following areas:

  • Provides that the stock of a subsidiary corporation or related entity of a foreign insurer is exempt from certain limitations on valuation and investment requirements for solvency evaluation purposes if permissible in the domiciled state.
  • Provides an exemption to the adjuster licensing exam to individuals who receive a Claims Adjuster Certified Professional (CACP) designation from WebCE, Inc. 
  • Incorporates a recent amendment of the Gramm-Leach-Bliley Act for purposes of privacy standards applicable to certain notices required by rules adopted by the Department of Financial Services (DFS) and the Financial Services Commission (FSC).
  • Provides that an insurer may elect to issue a policy that is not executed by one of several specified insurer representatives and the policy is not invalid despite not being executed.
  • Requires that a property and casualty insurer summarize policy changes on the required Notice of Change in Policy Terms that is issued at policy renewal, rather than merely issuing a notice.
  • Provides that a third-party assignee may request mediation of a property insurance claim; but an insurer is not required to participate in mediations requested by the assignee.
  • Permits motor vehicle insurers to use the Intelligent Mail barcode, or similar method approved by the United States Postal Service, to document proof of mailing of certain required notices.
  • Authorizes specialty insurers to disclaim a presumption of control regarding acquisition of stocks, interests, and assets of other companies in the same manner as insurers.
  • Expands the confidentiality of documents submitted to the Office of Insurance Regulation (OIR) under Own-Risk and Solvency Assessment (ORSA) requirements to make them inadmissible as evidence in any private civil action, regardless of from whom they were obtained, rather than only when they are obtained from OIR.
  • Revises unearned premium reserve requirements.
  • Authorizes motor vehicle service agreement companies and health maintenance organizations (HMOs) to deliver agreements and HMO contracts, respectively, in the same manner as currently required for insurers, including the posting of boilerplate contents on a website and requiring delivery within 60 days, rather than 45 days and 10 days, respectively.

Department of Financial Services: SB 1292 (Stargel) and HB 1073 (Hager)

SB 1292 was substituted for HB 1073. HB 1073 passed the Senate on March 8, 2018. It has ENROLLED AND sent to the governor for his signature, but when it is he will have thirty days after the end of session to act. Effective Date: July 1, 2018.

As it relates to surplus lines, section 36 of the bill amends s. 626.927, F.S., revising conditions under which an individual may be licensed as a surplus lines agent solely for the purpose of placing certain coverages with surplus lines insurers; and, section 37 amends s. 626.930, F.S., revising a requirement relating to the location of a surplus lines agent's surplus lines business records.

HB 1073 additionally revises requirements for electronic originals and copying of certain records media; revises certain bureau names and creates new bureaus; revises service options for child transition plans; creates the Florida Open Financial Statement System and authorizes the CFO to choose contractors to build the system; revises requirements for licensure or appointment of managing general agents under the Florida Insurance Code; revises license application process for managing general agents; revises the terms of office for the Florida Fire Safety Board; and deletes a provision for staffing and funding from the formula of Florida State Fire College.