The presidency of the Florida Surplus Lines Association (FSLA)is a two-year commitment. We talked with President Bruce Bowerswhen he assumed the post in 2009. As he moved into his second andfinal year, Bowers talked with Florida Underwriter again aboutFSLA, surplus lines business in Florida, and the Florida insurancemarketplace in general.

Q. Let's look at a few of the initiatives and goals you outlinedfor FSLA a year ago. First, can you tell us how FSLA has done inits efforts to attract new members and associate members?

A. Our goal last year was to grow our regular membership by atleast 15 percent, and I am happy to report that we were successfulin doing so. Our membership and associates have been verysupportive throughout this past year, culminating in the largestattendance and sponsorship ever for our 2010 convention. Duringmost of the past year our focus was almost exclusively on regularmembership growth, and now we're going to devote some of the sameenergy and resources toward our potential associate members. Wehave just completed a mailing to prospective carriers and vendorsand others that would qualify as associates, and I am expectinggreat results from that effort as well.

Q. The annual convention is well known within the industry. Inaddition to that event, what do members and associates gain fromFSLA membership?

A. If we are to be effective surplus lines agents we need to bea resource to our retail customers. In the same way, we feel FSLAis and will continue to be a resource to our membership. We areconstantly communicating legislative issues and changes to ourmembers and alerting them about how specific statute or codechanges impact them and their customers. Our legislative committee(and liaison Doug Mang) has been working very hard to keep up withlegal changes and the opportunities and/or challenges they present.We have become much more proactive in communicating with members ofthe Legislature and educating them about our industry in generaland the surplus lines industry in particular.

Additionally, FSLA is developing a PAC to take specific actionwhen necessary regarding key legislation. The FSLA was instrumentalin helping to avoid a huge mess for brokers, agents and theircustomers in the Essex v Zota case. Currently, our focus is on theNational Reinsurance Reform Act (NRRA), which establishes a new setof guidelines regarding handling payment of the surplus lines taxon multi-state risks.

We continue to bring important speakers to our meetings andevents. For example, guest speakers at our most recent conventionincluded William Berkley, chairman of W.R. Berkley, and HankWatkins, chairman of Lloyd's North America. Our members andassociate members also learn from one another and help each anotheras we work through the issues brought about by economic conditionsand the resulting insurance marketplace conditions.

Q. To follow up on NRRA and the current market conditions:First, what is the likelihood that the marketplace will change inthe next 12 months?

A. I am an optimist, so I believe that we are close to seeingthe market start to turn and become a little harder. I wish I couldsay it is going to happen in the last quarter of 2010, or it isgoing to be a major change, but right now with all of the capitalstill available in the worldwide insurance market, a fast orsignificant change does not seem likely (that's of course excludingany catastrophic events that could change some things muchfaster).

Q. You mentioned the NRRA. Can you explain what is happening andwhy it may be an issue for Florida agents?

A. There are a number of elements to the legislation, and Iwould encourage anyone seeking more information on this or anyfederal legislation involving the insurance industry to go theNAPSLO web site http://www.napslo.org/, and for Florida legislativeissues, go to FSLA's web site http://www.myfsla.com/. As for NRRA,we are most concerned about the treatment of insured operationswith multi-state locations. The heart of the problem is this: Thelegislation states that the surplus lines tax is paid to the “homestate” of the insured's business operations. The problem is, thedetails of this have been left to be worked out among various stateinsurance departments, surplus lines associations. and otherpossibly competing entities.

The legislation was passed in July of this year and goes intoeffect one year from the date of passage, or July 2011. While thatseems like a lot of time, the logistics of effectively implementingthis are daunting. Some entity, either currently in place or yet tobe established, has to find a way to bring together 50 differentstate surplus lines departments, insurance departments, stampingoffices, etc., for this to work.

In addition, the term “home state” has not been defined to thesatisfaction of everyone involved. Also, the who, how and where thetax is to be remitted is still not clear.

Along with these administrative issues, agents face the problemof being in a state (possibly Florida) that could be“uncompetitive” due to a higher surplus lines tax rate and/or agreater amount of fees to be applied to a policy premium.

It is understood that this is not going to impact every agent interms of individual accounts because there are many accountswritten that do not have multi-state locations. However, it mayimpact agents here if the state receives less revenue from surpluslines tax, or if the perception of clients ultimately is thatbuying insurance in Florida costs them more than other statesbecause of higher taxes and fees.

Q. What's on tap for the next year for FSLA?

A. We will do much of the same things that we have been doing;all of the items noted above. FSLA will continue to work with thevarious state associations, including FAIA and PIA-Florida, to thebenefit of our combined memberships. We will continue to work withand to help educate our elected officials and those involved withshaping our economic future. It is critically important that theinsurance industry be allowed to compete in a free market — andthat includes the surplus lines industry. FSLA will do its part tohelp ensure that happens.