End to Florida Agents’ ‘Diligent Effort’ Rule on Surplus Lines Takes Effect July 1

Florida’s governor has signed House Bill 1549 into law, eliminating the requirement that insurance agents make a “diligent effort” to find coverage before placing properties with a surplus lines carrier.

Thanks to a late amendment to the bill in May, the law drops the requirement that agents obtain three written declinations from insurers before turning to the surplus market. The Florida Association of Insurance Agents supported the change. The association’s B.G. Murphy has said the three-declinations rule was unnecessary and a waste of time for agents.

The law takes effect July 1, so policies inked before then must continue to meet the three-strikes rule.

The amended wording to the bill also requires an addendum to the disclosure already required about surplus lines policyholders not being protected by the Florida Insurance Guaranty Association in case of insolvency. The added language for the disclosure document reads: “Additionally, surplus lines insurers’ policy rates and forms are not approved by any Florida regulatory agency.”

The bill further states that, if the acknowledgment of the disclosure is signed by the policyholder, “the insured is presumed to have been informed and to know that other coverage may be available.” The measure deletes other sections related to exportability of coverage to surplus lines, Murphy explained in a posting.

The Florida Surplus Lines Insurance Office said it will update all relevant forms to reflect the new language. FAIA also plans to update the consumer acknowledgement wording in its community library.

Topics Agencies Florida Excess Surplus