The Florida Supreme Court has provided an answer to a question important to insurers that have issued policies under Florida’s surplus lines laws. In Essex Ins. Co. v. Zota, Case No. SC06-2031 (June 26, 2008), the Court considered numerous questions certified from the U.S. Court of Appeals for the 11th Circuit. The primary question considered, and the only question directly answered, was whether two Florida statutes (§ 626.922 and § 627.421) place an affirmative duty upon a surplus lines insurer or its direct surplus lines agent to deliver a copy of a surplus lines insurance policy directly to the insured, notwithstanding the successful delivery of the relevant policy to the representative of the insured, i.e., the producing agent. Consideration of this question necessitated an analysis of whether Chapter 627, Florida Statutes applies to insurance placed under Florida’s surplus lines laws. Specifically at issue was the meaning of the terms “Chapter” and “Part” as used in § 627.021.
After conducting an analysis of the statute and the relevant legislative history, The Court ruled that § 627.021 does not exempt surplus lines insurance from all of Chapter 627, Florida Statutes. Rather, the Court found that § 627.021 only exempts surplus lines insurance from the ratings laws in “Part I” of Chapter 627 (§§627.011-627.381, Florida Statutes) but that the remainder of Chapter 627 governs policies issued pursuant to Florida’s surplus lines laws (§§626.913-626.937, Florida Statutes). The Court stated:
The correct interpretation is that the exclusionary provisions of § 627.021(2) apply only to the ratings laws found in part I of chapter 627.
Further, in consideration of the first certified question, the Court additionally found that the traditional common law presumption that an independent insurance broker is the agent of the insured, “emerges unscathed” from an analysis of § 626.922 and § 627.421. Thus, the Court confirmed that delivery of evidence of insurance to the insured’s independent broker is sufficient to comply with § 626.922 and § 627.421.
The broader impact of this ruling on surplus lines insurers in light of court dicta remains unclear. If the Florida Insurance Department breaks from tradition and follows the Court’s narrow interpretation of § 627.021, it could subject surplus lines insurers to all the state’s rules (except ratings laws) pertaining to insurance contracts including those relating to attorney’s fees (§ 627.428), valued policy laws (§ 627.702) and notices of nonrenewal (§ 626.9201).
Parties have 15 days (or until July 11) to file a motion for rehearing. Until the 15 day window has expired, the opinion is not final and does not take effect.
