Federal Judge Strikes Fla. Non-admitted Rule

Under the state's regulations, a non-resident agent needed to be accompanied by a resident agent in order to conduct business in Florida. The resident agent also had to countersign the policy and received up to half of the non-resident agent's commission, depending on the type of policy written. The regulations also prohibited non-resident agents from obtaining surplus lines licenses.

The judge ruled that the regulations violate the privileges and immunities clause and the equal protection clause of the U.S. Constitution.

In his ruling, Judge Hinkle said, "There is no legitimate rational basis for any such distinction" between the resident and non-resident agents except "to protect the financial interests of agents who reside in Florida."

He noted that the regulations created barriers to doing business in the state and no state may create rules that deny someone from out of state from "plying their trade within the state" so long as that person meets the same standards.

Ken A. Crerar, president of the Washington D.C.-based Council of Insurance Agents & Brokers, which brought suit to overturn the requirement, said, "The Florida countersignature law was one of the most stubborn vestiges of protectionism in agent–broker licensing regulations in America.

"It added costs to consumers without adding value to the insurance product, and it was a barrier to interstate domestic competition that only helped enrich a group of producers who marketed their services as countersigners."

Tami Torres, a spokeswoman for the Florida Department of Financial Services, which regulates insurance, said the department plans to abide by the ruling on countersignature and not appeal it. However, it is reviewing how it affects surplus lines.

Ms. Torres said the regulations date back to a time when communication was difficult and information did not flow as freely as it does today. Back then, the regulations made sense as a form of consumer protection, "so they would have confidence in whom they were doing business with."

Technology today, she said, allows states to track agents and know if the agent was disciplined in other states, allowing the department to fulfill its obligation to protect consumers.

CIAB filed suit against countersignature laws in Florida and Nevada in June of 2002. A decision on the Nevada regulations is still pending.

While other states (Alabama, South Dakota and West Virginia) have countersignature laws, CIAB pressed its suit in Florida and Nevada because they were seen as the most egregious by enforcing the collection of fees.

The Independent Insurance Agents & Brokers of America applauded the ruling, saying it breaks down barriers to licensing reciprocity.

It urged Congressional passage of regulations that would streamline the system and eliminate inconsistency without creating a new federal regulatory arm.