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The Florida Statutes

The 2001 Florida Statutes

Chapter 626
Insurance Field Representatives And Operations
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Section 626.918, Florida Statutes 2001

626.918  Eligible surplus lines insurers.--

(1)  No surplus lines agent shall place any coverage with any unauthorized insurer which is not then an eligible surplus lines insurer, except as permitted under subsections (5) and (6).

1(2)  No unauthorized insurer shall be or become an eligible surplus lines insurer unless made eligible by the department in accordance with the following conditions:

(a)  Eligibility of the insurer must be requested in writing by the Florida Surplus Lines Service Office;

(b)  The insurer must be currently an authorized insurer in the state or country of its domicile as to the kind or kinds of insurance proposed to be so placed and must have been such an insurer for not less than the 3 years next preceding or must be the wholly owned subsidiary of such authorized insurer or must be the wholly owned subsidiary of an already eligible surplus lines insurer as to the kind or kinds of insurance proposed for a period of not less than the 3 years next preceding. However, the department may waive the 3-year requirement if the insurer provides a product or service not readily available to the consumers of this state or has operated successfully for a period of at least 1 year next preceding and has capital and surplus of not less than $25 million;

(c)  Before granting eligibility, the requesting surplus lines agent or the insurer shall furnish the department with a duly authenticated copy of its current annual financial statement in the English language and with all monetary values therein expressed in United States dollars, at an exchange rate (in the case of statements originally made in the currencies of other countries) then-current and shown in the statement, and with such additional information relative to the insurer as the department may request;

(d)1.  The insurer must have and maintain surplus as to policyholders of not less than $15 million; in addition, an alien insurer must also have and maintain in the United States a trust fund for the protection of all its policyholders in the United States under terms deemed by the department to be reasonably adequate, in an amount not less than $5.4 million. Any such surplus as to policyholders or trust fund shall be represented by investments consisting of eligible investments for like funds of like domestic insurers under part II of chapter 625 provided, however, that in the case of an alien insurance company, any such surplus as to policyholders may be represented by investments permitted by the domestic regulator of such alien insurance company if such investments are substantially similar in terms of quality, liquidity, and security to eligible investments for like funds of like domestic insurers under part II of chapter 625;

2.  For those surplus lines insurers that were eligible on January 1, 1994, and that maintained their eligibility thereafter, the required surplus as to policyholders shall be:

a.  On December 31, 1994, and until December 30, 1995, $2.5 million.

b.  On December 31, 1995, and until December 30, 1996, $3.5 million.

c.  On December 31, 1996, and until December 30, 1997, $4.5 million.

d.  On December 31, 1997, and until December 30, 1998, $5.5 million.

e.  On December 31, 1998, and until December 30, 1999, $6.5 million.

f.  On December 31, 1999, and until December 30, 2000, $8 million.

g.  On December 31, 2000, and until December 30, 2001, $9.5 million.

h.  On December 31, 2001, and until December 30, 2002, $11 million.

i.  On December 31, 2002, and until December 30, 2003, $13 million.

j.  On December 31, 2003, and thereafter, $15 million.

3.  The capital and surplus requirements as set forth in subparagraph 2. do not apply in the case of an insurance exchange created by the laws of individual states, where the exchange maintains capital and surplus pursuant to the requirements of that state, or maintains capital and surplus in an amount not less than $50 million in the aggregate. For an insurance exchange which maintains funds in the amount of at least $12 million for the protection of all insurance exchange policyholders, each individual syndicate shall maintain minimum capital and surplus in an amount not less than $3 million. If the insurance exchange does not maintain funds in the amount of at least $12 million for the protection of all insurance exchange policyholders, each individual syndicate shall meet the minimum capital and surplus requirements set forth in subparagraph 2.;

4.  A surplus lines insurer which is a member of an insurance holding company that includes a member which is a Florida domestic insurer as set forth in its holding company registration statement, as set forth in s. 628.801 and rules adopted thereunder, may elect to maintain surplus as to policyholders in an amount equal to the requirements of s. 624.408, subject to the requirement that the surplus lines insurer shall at all times be in compliance with the requirements of chapter 625.

The election shall be submitted to the department and shall be effective upon the department's being satisfied that the requirements of subparagraph 4. have been met. The initial date of election shall be the date of department approval. The election approval application shall be on a form adopted by department rule. The department may approve an election form submitted pursuant to subparagraph 4. only if it was on file with the department before February 28, 1998;

(e)  The insurer must be of good reputation as to the providing of service to its policyholders and the payment of losses and claims;

(f)  The insurer must be eligible, as for authority to transact insurance in this state, under s. 624.404(3); and

(g)  This subsection does not apply as to unauthorized insurers made eligible under s. 626.917 as to wet marine and aviation risks.

(3)  The department shall from time to time publish a list of all currently eligible surplus lines insurers and shall mail a copy thereof to each licensed surplus lines agent at his or her office of record with the department.

(4)  This section shall not be deemed to cast upon the department any duty or responsibility to determine the actual financial condition or claims practices of any unauthorized insurer; and the status of eligibility, if granted by the department, shall indicate only that the insurer appears to be sound financially and to have satisfactory claims practices and that the department has no credible evidence to the contrary.

(5)  When it appears that any particular insurance risk which is eligible for export, but on which insurance coverage, in whole or in part, is not procurable from the eligible surplus lines insurers, after a search of eligible surplus lines insurers, then the surplus lines agent may file a supplemental signed statement setting forth such facts and advising the department that such part of the risk as shall be unprocurable, as aforesaid, is being placed with named unauthorized insurers, in the amounts and percentages set forth in the statement. Such named unauthorized insurer shall, however, before accepting any risk in this state, deposit with the department cash or securities acceptable to the department of the market value of $50,000 for each individual risk, contract, or certificate, which deposit shall be held by the department for the benefit of Florida policyholders only; and the surplus lines agent shall procure from such unauthorized insurer and file with the department a certified copy of its statement of condition as of the close of the last calendar year. If such statement reveals, including both capital and surplus, net assets of at least that amount required for licensure of a domestic insurer, then the surplus lines agent may proceed to consummate such contract of insurance. Whenever any insurance risk, or any part thereof, is placed with an unauthorized insurer, as provided herein, the policy, binder, or cover note shall contain a statement signed by the insured and the agent with the following notation: "The insured is aware that certain insurers participating in this risk have not been approved to transact business in Florida nor have they been declared eligible as surplus lines insurers by the Department of Insurance of Florida. The placing of such insurance by a duly licensed surplus lines agent in Florida shall not be construed as approval of such insurer by the Department of Insurance of Florida. Consequently, the insured is aware that the insured has severely limited the assistance available under the insurance laws of Florida. The insured is further aware that he or she may be charged a reasonable per policy fee, as provided in s. 626.916(4), Florida Statutes, for each policy certified for export." All other provisions of this code shall apply to such placement the same as if such risks were placed with an eligible surplus lines insurer.

(6)  When any particular insurance risk subject to subsection (5) is eligible for placement with an unauthorized insurer and not more than 12.5 percent of the risk is so subject, the Department of Insurance may, at its discretion, permit the agent to obtain from the insured a signed statement as indicated in subsection (5). All other provisions of this code apply to such placement the same as if such risks were placed with an eligible surplus lines insurer.

History.--s. 357, ch. 59-205; s. 1, ch. 61-105; s. 3, ch. 63-86; s. 1, ch. 63-209; ss. 13, 35, ch. 69-106; s. 2, ch. 71-18; s. 2, ch. 81-318; ss. 302, 318, 807, ch. 82-243; s. 2, ch. 88-104; s. 31, ch. 88-166; ss. 166, 206, 207, ch. 90-363; s. 4, ch. 91-429; s. 30, ch. 92-146; s. 12, ch. 93-410; s. 300, ch. 97-102; ss. 2, 7, ch. 97-196; s. 68, ch. 98-199; s. 2, ch. 2001-213.

1Note.--Section 24, ch. 2001-213, provides that "[a]ny quarterly or annual statement that is required to be filed after [June 13, 2001] shall be prepared in accordance with the provisions of this act." Section 25, ch. 2001-213, provides for retroactive applicability of s. 24, ch. 2001-213, to January 1, 2001.

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