What Retail Agents Need to Know to Access Florida Surplus Lines

10 +1 Questions of Advice for Agents Thinking of Sticking Their Toes into Florida’s Surplus Lines Waters

Gary Pullen, executive director, and the staff of the Florida Surplus Line Service Office supplied answers to 10 + 1 questions posed by Insurance Journal.

1. Can a Florida licensed retail or producing agent also be licensed and act as a surplus lines agent?

Yes. Florida law requires that an individual seeking a Florida surplus lines license must first be licensed as a Florida general lines agent. This applies to resident and nonresident agents.

2. How does a retail agent locate a Florida surplus lines agent who is eligible to place business?

Retail agents seeking a surplus lines agent writing a particular line of coverage in a given county may do so by visiting FSLSO’s “Looking for Coverage” report found on its website at http://www.fslso.com/market/reports/LookUpCoverage.aspx. A retail agent needs only to enter the applicable county for the risk, and the applicable coverage code before selecting “View Report.” The resulting report will provide a list of the agents that have written that line of coverage in that area within the last three months, in addition to their agency address and telephone number.

3. What coverages may a retail or producing agent place with a surplus lines agent?

Those coverages allowed under their “General Lines” license except for primary workers’ compensation and coverages where financial responsibility is mandated to authorized insurers.

4. Is a “diligent effort” the responsibility of the retail agent? How is “diligent effort” defined?

The retail agent is responsible for executing the diligent effort. The diligent effort is defined as having received three declinations from authorized or admitted insurance carriers writing that kind and class of insurance. With regard to residential structures valued at $1 million or more, only one rejection is required.

5. In addition to the diligent effort documentation, what documents or applications must a retail agent provide to a surplus lines agent?

In addition to the diligent effort, as a common business practice, the same documentation that would be provided to an admitted company would be given to the surplus lines agent.

6. What must a retail agent tell the insured whose insurance is being placed in the surplus lines market?

There is no statutory requirement except for the disclosure required pursuant to section 626.924 Florida Statute. However, prudence would suggest that the retail agent explain what surplus lines is and perhaps obtain a signed acknowledgement from their client.

7. In addition to the premium, what fees or taxes must the retail agent collect from the surplus lines insured?

The premium tax, Florida Surplus Lines Service Office fee, Citizens assessment when applicable, Florida Hurricane Catastrophe Fund emergency assessment and the Emergency Management and Preparedness Trust Fund Act $2 (personal residential) and $4 (commercial property).

8. For how long can a surplus lines policy be written?

Generally, the term length of a surplus lines policy would not be any different than that provided by the admitted market, though it may vary depending on the specifics of the policy.

9. How does a retail agent know that a surplus lines carrier is an eligible surplus lines carrier in Florida?

Retail or producing agents may look information relative to surplus lines carriers on FSLSO’s website (www.fslso.com) in several areas. For a listing of all current eligible surplus lines carriers and their contact information, you may visit FSLSO’s eligible insurer search directories at www.fslso.com/search/ins_search.asp.

For a more in depth look at an insurer’s financial information, agents and consumers may want to visit FSLSO’s Eligible Surplus Lines Insurer Financial Data reports on its website at http://www.fslso.com/market/financials/index.aspx. These reports provide compiled financial information for surplus lines insurers eligible to operate in the state of Florida, and provides information including A.M. Best rating, capital and surplus, net income and direct premium, with an arrow indicating either a negative or positive movement from the previous year. It provides not only financial information on Florida surplus lines insurers, but also contact information.

10. What happens upon renewal of a surplus lines policy? Is a diligent effort required again?

The retail or producing agent must complete the diligent effort each time the policy comes up for renewal, and it is the retail or producing agent’s responsibility to keep up with and maintain the expiration dates of policies he or she has placed with the surplus lines market.

+1. Is there other information about surplus lines that retail agents should know?

FSLSO has developed an information DVD and 2-hour education class geared. The DVD entitled “Surplus Lines Insurance for the Retail Agent” shares information about Florida’s surplus lines industry and summarizes the responsibilities of the retail agent. The DVD is free and may be ordered from FSLSO’s website at http://www.fslso.com/docspubs/media/index3.asp. In addition, the two-hour online education class, “The Retail Agent’s Role in the Surplus Lines Marketplace,” further explores Florida’s surplus lines market and the role of retail agents and their responsibilities to both the surplus lines agent and the consumer.

Topics Florida Carriers Agencies Excess Surplus