Florida Governor signs surplus lines insurance package HB 301 into law
The revision contains several surplus lines provisions that will become effective July 1.
Florida Gov. Ron DeSantis signed HB 301 on Tuesday, an insurance omnibus package that includes a provision for surplus lines modernization.
The Florida Surplus Lines Association (FSLA) praised HB 301′s passage and noted two important changes it includes for the surplus lines insurance industry in Florida.
First, HB 301 eliminates the prescriptive $35 cap on surplus lines agent policy fees and replaces it with a requirement that the fee be reasonable and separately disclosed to the customer before purchase as well as enumerated in the policy. FSLA says this change will make the market more competitive, particularly for small- and mid-sized businesses.
HB 301 also addresses the threshold for exporting insurance in a manner that will give property owners more options. Among some of its other provisions, the bill allows for the reduction of the property value requirement in certain “diligent effort circumstances.” For purposes of residential personal property, the threshold for obtaining one was reduced from $1 million to $700,000.
All provisions included in HB 301 become effective on July 1.
Other HB 301 provisions detailed
Through HB 301, Florida joins a majority of states that permit reasonable fees to be charged in a surplus lines transaction.
The legislation allows a reasonable fee to be charged by the retail agent in the transaction. While the surplus lines agent policy fee is taxable and reported to the FSLSO, retail agents seeking to charge a fee should work with their trade associations or legal counsel to ensure compliance with all appropriate regulatory guidance, WSIA advises. By law, the retail agent is similarly responsible for disclosing his or her fee separately for the customer prior to purchase.
HB 301, Section 1 amends the required reimbursement of loss adjustment expenses in reimbursement contracts between the State Board of Administration and property insurers under the Florida Hurricane Catastrophe Fund.
The provision asserts that reimbursement contracts must contain a promise by the board to reimburse the insurer for 45%, 75%, or 90% of its losses from each covered event in excess of the insurer’s retention, plus 5% of the reimbursed losses to cover loss adjustment expenses. For contracts and rates effective on or after June 1, 2019, the loss adjustment expense reimbursement must be 10% of the reimbursed losses.
Praise and support from WSIA
WSIA lobbied for HB 301 and issued a statement praising its passage. To outline and pass this legislative reform, WSIA partnered with FSLA to pass a revision WSIA says modernizes Florida’s laws by increasing options for consumers and benefiting the state’s economy.
Florida has the third largest surplus lines premium volume of any state in the nation, writing over $2 billion in premiums worth of commercial property coverage annually for the state’s brick and mortar businesses, such as retail outlets, hotels and restaurants.
Nick Cortezi, CEO of All Risks Ltd. noted in WSIA’s statement, “With its significant exposure to natural catastrophes, significant tourism industry and innovative and unique businesses, Florida consumers rely heavily on the surplus lines market to provide supplemental and alternative insurance coverages. This legislation will enhance the industry’s ability to continue to provide competitive insurance solutions to insureds.”
WSIA put forth resources for those with any questions about the legislative changes. Questions can be directed to either the Florida Surplus Lines Association Executive Director, Jillian Heddaeus (jillian@executiveoffice.org) at 850-222-3019, Keri Kish, WSIA Director of Government Relations (keri@wsia.org) or John Meetz, State Relations Manager (john@wsia.org) at 816-741-3910.
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