The operating procedures of Florida's homeowners' insurer of last resort, which exclude nonresident agents from placing business with it, are being challenged by an agents group.
In a statement, the Council of Insurance Agents & Brokers said it sent a letter yesterday to Citizens Property Insurance Corp. challenging the constitutionality of arrangements that keep nonresident agents from doing business with it.
The Washington, D.C.-based association said Citizens does not have a mechanism in place to allow nonadmitted agents to place business with the company. By only allowing resident agents to do business with Citizen's, the company is imposing countersignature regulations, which were found to be unconstitutional.
A federal court struck down Florida's countersignature regulations in 2003.
Citizens was created by the Florida Legislature and administered by the state's insurance department. It provides insurance for individuals residing in high risk areas who are unable to obtain coverage from the voluntary market and who are not eligible for coverage under the Florida Windstorm Underwriting Association.
CIAB said the letter states that since there "appears to be no procedure for appointment of a nonresident insurance producer with the corporation, a licensed nonresident insurance broker who wishes to provide personal or commercial coverage overseen by Citizens must place the risk through a resident agent."
"We respectfully clarify that this resident licensure requirement is no longer applicable for two reasons: 1) Florida law does not authorize imposition of the requirement, and 2) discriminating against nonresident agents and brokers in this manner is constitutionally impermissible in any event," CIAB said it said in the letter.
"We have already fought this battle and won," said Ken A. Crerar, president of the Council, in a statement. "There is no need for a lengthy debate. A simple clarification will ensure that the corporation is operating constitutionally and that all brokers and agents who want to do business with individuals covered by the state's insurer of last resort can do so."
Over the past three years, the CIAB has challenged countersignature requirements for nonresident insurance agents and brokers in every state that had such a statute on the books. Since its success in Florida, it has been successful in its challenges. Decisions, however, are under appeal in South Dakota, Nevada and Puerto Rico. The Virgin Islands has yet to have a court hearing on the issue.
A spokesman for Citizens did not know if the insurer received the letter yet and could not comment further at this time.
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