Florida lawmakers have recently introduced SB 1402 that could open up additional avenues for the placement of surplus lines business in the state.
On January 18, 2022, the Senate Banking and Insurance Committee passed SB 1402. The proposal would amend various provisions of Florida law by now permitting Florida-based surplus lines insurers to write business in the state. In particular, SB 1402 would amend Fla. Stat. § 626.914 by allowing a “domestic surplus insurer” to obtain an insurance certificate of authority and eligibility to write surplus lines insurance in the state if it holds at least $15 million in policyholders’ surplus. Under the proposed amendments, domestic surplus lines insurers would be subject to all financial and solvency requirements imposed upon domestic admitted insurers. Moreover, domestic surplus lines insurers would be exempt from all requirements relating to insurance rating and rating plans, policy forms, premiums charged to insureds, policy cancellations and renewals, and other requirements.
Florida is set to join a long list of states that now allow for domestic surplus lines insurers to obtain certificates of authority to write excess and surplus lines insurance therein. Prior to domestic surplus lines legislation, the only option that a U.S. insurer had to write surplus lines insurance in a state was to gain eligibility by being a licensed, admitted insurer in another state. Domestic surplus lines legislation is designed to overcome this inefficiency by allowing an insurance company to obtain a license solely to write excess and surplus business in its state of domicile as well as all other states, assuming the insurer meets the eligibility requirements under the Nonadmitted and Reinsurance Form Act of 2010 and such other states’ local eligibility and white list standards, as applicable.
The text of SB 1402 is available here.