The surplus lines industry wrote just over $37 billion in property and casualty premium nationwide in 2008. Of that, Florida accounted for $4.3 billion, or more than 10 percent of the total direct premium written. Over the past several years, Florida has been one of the top five states in surplus lines premium volume. In 2008, Florida reported the third highest premium writings, behind only California and Texas. For the first six months of 2009, Florida has outpaced those states to earn top ranking with over $2.35 billion in reported premium in January-June.
In Florida, agencies and companies involved in the surplus lines industry are members of the Florida Surplus Lines Association (FSLA), one of the largest and most-active such groups in the nation. At FSLA's recent annual convention, Bruce Bowers of Hull & Co. in Ft. Lauderdale was installed as the organization's new president. Florida Underwriter spoke with him about FSLA's purpose and goals and the significance of surplus lines products in the Florida marketplace.
Q. Can you give us some basic information about the FSLA?
A. I am proud to tell you that our association will be celebrating our 50th anniversary in 2010, so we are not a new entity by any means. Our current membership totals 1,121 active members. Of that total, 317 are non-resident licensees and 804 are resident licensees. Those numbers really illustrate the size, geographic reach and importance of the surplus lines market in Florida.
Q. Why does the FSLA exist?
A. There are many reasons, but I will try to give you the most significant. FSLA members are dedicated to several key principals: To educate our members and the industry in general regarding surplus lines issues; to promote professionalism among our members; to maintain liaison with other segments of the insurance industry, i.e. regulatory bodies, insurers and insurance producer groups; and to promote and support the independent insurance agency system.
Q. During your address at the FSLA annual meeting a few months ago, you mentioned several goals for the organization for the coming year. They included making the association more vibrant, relevant, and active. Can you offer some insight as to what you will be doing specifically to achieve those goals?
A. I would like to see us increase our membership by 10-15 percent in the coming year, and that initiative will include adding more company and vendor partners. We will also work to encourage our existing members toward more active participation. We have a great team and have had some wonderful achievements -- we would just like to increase the size of the team. Another specific goal is for us to become a little better at disseminating information to our customers as well as our members. One way we will do that is to improve our web presence by making it more interactive, informative and user friendly. We are in the process of finishing that now and our new site should be in place by the end of November.
Q. How involved is FSLA with other state and national insurance associations?
A. We are involved to some extent now, but as time goes on we will be much more so. Our future efforts will include building new relationships and enhancing existing ones with insurance industry associations, both in Florida and nationally. We remain very supportive of the independent agency system and will continue to do what we can to assist Florida agency associations, including PIA of Florida and the Florida Association of Insurance Agents, and others. In addition, we have good working relationships with national associations such as NAPSLO, AAMGA. I see us being more proactive in this regard.
Q. What issues could FSLA and agency associations be working on together in the coming months and years?
A. The short answer is to do what we can to aid the overall health of the P&C market, first and foremost in the state of Florida. Within that larger scope are issues like Citizens Property Insurance Corp., the Hurricane Catastrophe Fund, and take-out companies. We believe these are all critical issues for all insurance professionals in our state.
Q. In addition to the issues you just mentioned, FSLA has been engaged in another very important effort regarding the Essex v Zota ruling, and what that may have implied for the insurance industry in Florida. (In Essex, the Florida Supreme Court took the position that non-admitted companies had to file rate and form for approval, just like admitted carriers. Legislation was passed during the 2009 session that negates that ruling). What has FSLA learned or had affirmed by that experience?
A. For one, we confirmed that we have a great team on the legislative side. We have a legislative committee that communicates with the Florida Legislature through our general counsel, Doug Mang. That is important, as we must stay on top of legislation that could be harmful to the industry in Florida. We also communicate regularly with the Department of Financial Services, Office of Insurance Regulation, and the Florida Surplus Lines Service Office. There are others, but these are a few of the Florida entities with whom we work on a frequent basis. We also found out that it is critical that we have ongoing dialogue with appropriate members of the state house and senate, not just when we have a burning issue.
Q. To follow up on that last point, for years FSLA has been content working within the appropriate legislative and regulatory channels to get things accomplished without much effort or desire to be in the public eye. Is that approach changing?
A. I would say that while we were not hiding, we were content to fly under the radar. There will be situations where we will go about our business without much public notice or fanfare. But given recent events -- political, market and otherwise -- I do not think it is possible for FSLA to be inconspicuous or less-than-public as we go forward. Issues are coming at us faster, they are more complex, and we find that sometimes those making decisions about our business are not as well informed about our industry as we had thought and hoped. We are going to have to be visible to change that.
Q. Those decisions you reference are being made in several places and by several groups, including the Florida Legislature and insurance company home offices. Where will you turn your attention first?
A. The perception and understanding of our part of the business in the Florida Legislature can be improved. We simply have to do a better job of explaining who we are as an industry, what we do, and how it positively impacts the Florida insurance landscape. A lack of proper understanding has created or added to some of the problems we have faced recently. Our segment of the industry is far too important for that, and the industry in Florida has too much at stake for us not to work hard to try to improve that situation.
Q. Insurance companies have regarded Florida as a difficult state for filing rates, forms, amendments to policy language, and the like. Assuming FSLA sees that as a concern, what can you do about it?
A. I think we all can agree that historically Florida has at times been a difficult place for carriers to do business for a number of reasons. We hope to be part of an initiative to attract carriers and at the same time to encourage the state to make the environment a little more friendly and supportive. Going forward, FSLA will be working with all the groups we have already named, and collectively we hope to find ways to communicate this information in a more proactive and effective way.
Q. It is clear that improving communications is a key element to your plans going forward. In your opinion, how have you done up to this point? What is the current perception by insurance agents of surplus lines professionals in Florida?
A. I think recent perception has been good. Agents see most of the people working in our part of the industry as professional; that they have a good understanding of the marketplace, including coverage and surplus lines business in general. I would add that there is respect for the ethical and moral standards of surplus lines agents as well. I think that has been a result of an active effort on the part of the FSLA and its individual members. We are doing a good job, but we can always do better.
