The Florida Office of Insurance Regulation said today that it interprets Florida law as saying that nonadmitted or surplus lines insurers are not required to file forms reports with the agency, except in very limited situations.

The comments by an OIR staff official were designed to provide certainty to an industry roiled by a June decision of the state Supreme Court raising the possibility that surplus lines carriers would be required to comply with all but one section of Florida insurance laws that formerly were thought to apply only to admitted insurers.

The OIR's comments were first made last week to Gary Pullen, executive director of the Florida Surplus Lines Service Office, after he was asked at a recent statewide meeting of surplus brokers to discuss the issue with the OIR.

While important because they would receive the forms, Mr. Pullen cautioned, the surplus lines industry is still considering whether to take the issue up with the state legislature when it convenes next spring. "We want certainty," he said.

"That is their position, and that is not to say that a court might issue a different ruling or opinion." Mr. Pullen said, adding that the legislature could take a different position.

"The legislature won't convene until spring, so what we are doing as an organization is evaluating what all our options are and what the likelihood is that we would get a specific exemption to clarify this issue," he noted.

The problem was caused by a June decision by the state Supreme Court in Essex Insurance Co. v. Zota.

While the decision was mostly favorable to the surplus lines industry, the court said in its ruling that because of a scrivener's error in enrolling a law that redrafted Florida statutes, all but one section of Florida insurance codes, believed applicable only to admitted insurers, also applied to surplus lines insurers.

The only provisions of the laws dealing with admitted insurers that don't apply to surplus lines insurers are those dealing with rates and rating agencies, the court said.

The industry's concern stems from the possibility that under this ruling, surplus lines insurers could potentially be subjected to all the state's rules relating to insurance contracts, including those involving notices of nonrenewal, imposition of attorneys fees and valued policy laws, according to officials at the National Association of Surplus Lines Offices, Kansas City, Mo.

Daniel O'Leary, chairman of Shelly, Middlebrooks & O'Leary, Jacksonville, a surplus lines broker, said the court decision "had not as yet affected our business."

But, he said it had stirred such concern that a number of trade groups representing Florida surplus lines insurers, brokers and agents had formed a task force to look into it and asked Mr. Pullen to coordinate the effort.

Asked to confirm OIR's comments to Mr. Pullen, an OIR official told the National Underwriter today that the only exceptions are pending legal matters and company investigations.

"The Florida Office of Insurance Regulation does not require surplus lines policy forms to be filed, with just one exception," said Ed Domansky, OIR director of communications.

"The existence of this requirement further supports the argument that surplus lines policy forms are not generally subject to OIR review," he said. "To our knowledge, surplus lines policy forms are not subject to review in other states either."

Mr. Domansky added that the OIR has had three forms filed under the "unique" provision. "We have not approved any of them," he said.

Special Reports /

Fla. OIR: No Form Mandate For Surplus Lines

Related Stories

Recommended For You