Editor's Note: Final figures for 2005 have been compiled for the Surplus Lines market in Florida, and signs indicate that the market is heading for another strong year as the top 10 insurers by premium volume indicated they plan not to reduce their presence in the market this year. Chief Financial Officer Tony Krause of the Florida Surplus Lines Service Office offers this report on the market.
The market conditions in Florida appear to have set the stage for a banner year in the surplus lines industry. Based on the final figures for 2005, the total premiums reported for the year are up nearly $480 million from 2004. The total premiums reported for 2005 were $3.43 billion as compared to $2.95 billion for 2004.
In addition, based on recent surveys of the top 10 insurers (by premium volume), all indications suggest that there are no plans for the insurers to reduce writings in Florida in 2006. In fact, certain insurers have plans to expand in the Florida market. This should all add up to an already strong market for the surplus lines industry for 2006.
The increase in reported premiums for 2005 has resulted in the Florida Surplus Lines Service Office collecting premium taxes in the amount of $134,069,345. This is an increase over 2004 in premium taxes of approximately $24 million. With the increase in reported premiums over the past several years, the FSLSO Board of Governors voted on and approved a reduction in the FSLSO service fee from 0.25 percent to 0.2 percent. This reduction was to take effect for all policies effective on or after April 1, 2006.
The accompanying chart reflects the top 10 coverages (by premium) for 2005 and 2004. Remember, you can review the financial data of any eligible Florida insurer by visiting FSLSO's Insurer Financial Data on the web at www.fslso.com/market/ insurer/index.asp.
All new and renewal policies/certificates with an effective date on or after April 1, 2006, will incur a service fee of 0.2 percent of the total gross premium, reports Carolyn Daniels, assistant director of agent relations for FSLSO. All new and renewal policies/certificates with an effective date prior to April 1, 2006, will incur a service fee of 0.25 percent of the total gross premium. The service fee percentage charged on the premium is based on the effective date of the policy.
The service fee for all endorsements, audits, installments, cancellations or return of premium transactions applicable to policies/certificates effective prior to April 1 will be the same percentage as the in-ception date of the policy/certificate being endorsed.
Business rules for calculating the correct service fee have been programmed into the FSLSO's management system. If you are using FSLSO Reporting Software, or SLIP, you do not have to make any changes. You should contact your agency's information technology vendor or staff regarding needed revisions to your agency management system necessary to calculate the revised service fee.
For the Record . . .
o Effective Dec. 15, 2005, ASI Lloyd's was approved by DFS/OIR to write all lines of business for which the applicant is eligible to write pursuant to the Surplus Lines Law. FEIN: 75-2904629; Florida Code#: S2242.
o Effective Dec. 15, 2005, Axis Specialty Europe Limited was approved by DFS/OIR to write all lines of business for which the applicant is eligible to write pursuant to the Surplus Lines Law. NAIC#: AA-1784130; Florida Code#: S2241.
o Effective Nov. 11, 2005, DFS/OIR recognized the name change of QBE International Insurance Limited to QBE Insurance (Europe) Limited. The FEIN did not change.
o Effective Nov. 17, 2005, United Coastal Insurance Company was acquired by Rockhill Holding Company. The insurer's name was changed to Rockhill Insurance Company at that time.
o Effective Nov. 7, 2005, Delvag Luftfahrtver-sicherungs-Aktiengesellschaft has requested they be removed from Florida's eligibility list effective immediately, however, the company will remain on the list officially until a consent order is processed by DFS/OIR.
o Effective Nov. 21, 2005, Through Transport Mutual Insurance Association (Bermuda) has requested they be removed from Florida's eligibility list effective immediately, however, the company will remain on the list officially until a consent order is processed by DFS/OIR.
o Effective Oct. 27, 2005, Northern Assurance Company, Ltd. was officially removed from Florida's eligibility list.
o Effective Dec. 15, 2005, Illinois EMCASCO Insurance Company was officially removed from Florida's eligibility list.
Proxix Develops Storm Surge Measure
In time for the 2006 hurricane season, a Palm Harbor company has released software that it says can determine storm surge risk. Proxix Solutions has developed Coastal Storm Surge, a computer program that incorporates all offshore and onshore variables in measuring potential damage from storms. Proxix hazard scientists incorporated offshore variables (wind speed, hurricane speed, storm track, barometric pressure, tide, and water depth) and onshore variables (human and natural barriers and elevation) into the model along with a range of storm heights derived from Category 1 to Category 5 hurricanes to assess storm surge risk for the Atlantic and Gulf Coast states.
