When the Essex v. Zota decision was rendered in June 2008, the surplus lines industry was shaken to its very foundation by its implications. The Florida Supreme Court was only asked four specific questions: to include whether or not the surplus lines policy had to be delivered to the insured as opposed to the insured's retail agent, and whether or not the plaintiff can recover attorneys' fees in a case against the surplus lines carrier. The Court, however, elaborated on its view of the case and in a decision (which we believe to be incorrect), found that the exception that was put in by the Florida Surplus Lines Association in 1988 to exempt the surplus lines industry from the entire Chapter 627 relating to the admitted industry only applied to the filing of rates by the surplus lines industry, leaving the rest of the Chapter open for grabs by the trial lawyers.

And what a field day they had. Many cases were filed, both individually and as a class action, in order to seek compensation from the industry for statutory provisions that were never applied to the surplus lines industry, and never intended to apply to the surplus lines industry. Some of the cases endeavored to hold the industry liable for failure to file forms for approval with the Office of Insurance Regulation (OIR).

One such case argued that policy exclusions could not be applied because the forms had not been approved by the OIR. The OIR, however, never approved forms for the surplus lines industry, does not approve them today, and never intended to approve the forms for the industry. It so said in affidavits filed in court.

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