This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0951e.COM
DATE: 2/25/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 951 Domestic Surplus Lines Insurers
SPONSOR(S): Commerce Committee, Gregory
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 15 Y, 0 N Fortenberry Luczynski
2) Ways & Means Committee 17 Y, 0 N LaTorre Aldridge
3) Commerce Committee 18 Y, 4 N, As CS Fortenberry Hamon
SUMMARY ANALYSIS
With certain exceptions, Florida law requires any person transacting insurance to have a certificate of authority
issued by the Office of Insurance Regulation (OIR). There are risks for which insurance in the admitted market are
not available because insurers are unable or unwilling to write policies for them. Therefore, states allow insurers that
are not otherwise authorized to transact insurance to sell surplus lines insurance if they meet certain requirements.
Historically, surplus lines insurers generally are not permitted to write surplus lines insurance in their states of
domicile. However, some states have enacted laws authorizing domestic surplus lines insurers (DSLI) in recent
years. These are surplus lines insurers that offer surplus lines policies in their states of domicile. Prior to the creation
of laws allowing DSLI, a surplus lines insurer seeking to transact surplus lines in its state of domicile had to form a
second company domiciled in a different state which would then offer surplus lines policies in the insurer’s original
state of domicile. Over 20 states have authorized DSLI.
The bill defines “domestic surplus lines insurer” as a nonadmitted insurer domiciled in this state that OIR has
deemed eligible and authorized to write surplus lines insurance. The bill creates a statutory framework to allow a
DSLI to issue surplus lines policies in this state, by establishing certain requirements, which include:
A nonadmitted insurer possessing a policyholder surplus of at least $15 million may be authorized to
transact insurance as a DSLI under a resolution by its board and with approval of OIR. The DSLI must
maintain this surplus at all times.
Such nonadmitted insurers are authorized to write surplus lines insurance in any jurisdiction, including
this state, and that this authorization is not contingent upon holding a certificate of authority.
Eligible surplus lines insurers may write any kind of insurance that unauthorized insurers not domiciled in
this state are eligible to write.
A DSLI may only write surplus lines insurance in Florida and may only sell policies through a surplus
lines agent.
All requirements imposed by the Florida Insurance Code on admitted domestic insurers apply to DSLI
unless the DSLI are otherwise specifically exempted.
A policy issued by a DSLI is exempt from all statutory requirements relating to insurance rating, policy
forms, premiums, cancellations, nonrenewals, and renewals, and from any other statutory requirements
that do not apply to surplus lines policies issued by surplus lines insurers domiciled in another state.
The Revenue Estimating Conference has not estimated the potential revenue impacts of the bill. Staff estimates that
the bill may have a positive/negative indeterminate impact on General Revenue and state trust fund revenue. The
impact may be positive if the bill leads to additional policies being written in the state, resulting in increased surplus
lines tax collections or negative if additional competition leads to lower premium rates overall, resulting in decreased
surplus lines tax collections.
The bill is effective on July 1, 2022. STORAGE NAME: h0951e.COM PAGE: 2
DATE: 2/25/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
With certain exceptions, Florida law requires any person transacting insurance to have a certificate of
authority issued by the Office of Insurance Regulation (OIR).
1
The term “admitted market” refers to
insurers that have a certificate of authority issued by OIR.
2
Such insurers are also referred to as
“authorized insurers.”
Authorized insurers in Florida are subject to the provisions of the Florida Insurance Code
3
and
regulation primarily by OIR.
4
OIR’s regulatory authority over authorized insurers includes solvency and
financial strength, insurance policy forms and rates, and market conduct of insurers.
Surplus Lines Insurance
There are risks for which insurance in the admitted market are not available because insurers are
unable or unwilling to write policies for them. Therefore, states allow insurers that are not otherwise
authorized to transact insurance to sell surplus lines insurance if they meet certain requirements. The
three basic categories of risks typically written by surplus lines insurers are:
Specialty risks that admitted insurers do not desire to write;
Risks for which admitted carriers do not have approved policy forms or rates; and
Risks where a policyholder needs higher coverage limits than those available on the admitted
market.
The Florida Surplus Lines Service Office (FSLSO) administers surplus lines business in this state.
5
A
certificate of authority is not required of an insurer with respect to lawfully written surplus lines policies.
6
Surplus lines insurers are still considered “unauthorized” insurers,
7
and may write only surplus lines
policies if they are made “eligible” by OIR. Except as specifically stated, surplus lines insurers are not
subject to regulation by OIR under ch. 627, F.S., which includes statutory provisions regarding rating
standards and insurance policy forms.
8
Surplus lines insurers are subject to the Unfair Insurance
Trade Practices Act.
9
Surplus Lines Law
10
Florida’s Surplus Lines Law is designed to provide orderly access to unauthorized insurers who provide
surplus lines policies. Four general requirements must be met for insurance to be exported (to place a
policy in an unauthorized insurer under the Surplus Lines Law) to a surplus lines insurer:
11
The insurance must be eligible for export under s. 626.916, F.S. or 626.917, F.S.;
The insurer must be an eligible surplus lines insurer under s. 626.917, F.S. or 626.918, F.S.;
1
S. 624.401, F.S. In the Florida Insurance Code (FIC), a person also includes a business entity such as an insurer.
2
S. 624.404, F.S.
3
Section 624.404, F.S., provides that an insurer must be in compliance with the FIC to qualify for and hold authority to
transact insurance in the state. The FIC is chapters 624-632, 634, 635, 636,641, 642, 648, and 651, F.S. S. 624.01, F.S.
4
In general, OIR has regulatory authority over insurers and the Department of Financial Services (DFS) has regulatory
authority over insurance agents and agencies.
5
S. 626.921, F.S.
6
S. 624.402, F.S.
7
S. 624.09(2), F.S.
8
S. 626.913(4), F.S.
9
Ss. 626.951 – 626.99, F.S. Under s. 626.9521, F.S., no person may engage in this state in any unfair insurance trade
practice. “Person” is defined by s. 626.9511(1), F.S., to mean any individual, corporation, association, partnership, or any
entity involved in the business of insurance.
10
Sections 626.913 – 626.937, F.S., constitute and may be referred as the “Surplus Lines Law.”
11
S. 626.915, F.S. STORAGE NAME: h0951e.COM PAGE: 3
DATE: 2/25/2022
The insurance must be placed through a licensed Florida Surplus Lines Agent; and
All other applicable provisions of the Surplus Lines Law must be met.
Eligibility for Export to a Surplus Lines Insurer
Insurance coverage is eligible for export to a surplus lines insurer only if:
The insurance cannot be obtained from an authorized insurer after the agent has made a
diligent effort to place the insurance with an authorized insurer.
12
The surplus lines agent must
verify that a diligent effort was made by requiring a properly documented statement of diligent
effort from the agent.
13
A “diligent effort” means seeking coverage from, and having been
rejected by, at least three authorized insurers currently writing the same type of coverage and
documenting these rejections.
14
However, if a residential structure has a dwelling replacement
cost of $700,000 or more, coverage need only be sought from one authorized insurer.
15
The premium rate for the surplus lines coverage may not be lower than the rate currently used
by a majority of authorized insurers for the same coverage on a similar risk.
16
The surplus lines coverage may not be more favorable to the insured than under similar
contracts currently used by the majority of authorized insurers writing similar coverage on
similar risks.
17
The surplus lines policy must not provide a deductible that is generally unavailable from
authorized insurers, except as applicable to extended coverage for fire or windstorm
insurance.
18
Requirements for Eligibility of Surplus Lines Insurers
An unauthorized insurer may only become an eligible surplus lines insurer if it meets the following
requirements:
19
The insurer must currently be an authorized insurer in its state or country of domicile as to the
kinds of insurance it would transact in Florida. In general, the insurer must have transacted such
insurance for 3 years in its state of domicile.
20
However, OIR may waive this requirement if the
insurer has capital and surplus of at least $25 million and either is offering a product not readily
available in Florida or has operated successfully for at least the immediately preceding year.
21
OIR receives an authenticated copy of its current annual financial statement.
22
The insurer must maintain surplus as to policyholders of not less than $15 million,
23
with the
exception of:
o Insurance exchanges created by the laws of a state, if they meet the state’s capital and
surplus requirements or maintain a capital and surplus of at least $50 million;
24
and
o A surplus lines insurer that is a member of an insurance holding company that includes a
member which is a Florida domestic insurer, may instead meet the surplus and capital
requirements applicable to authorized insurers under s. 624.408, F.S., and must comply
with ch. 625, F.S., regarding accounting, investments, and deposits by insurers.
25
12
S. 626.916(1)(a), F.S.
13
Id.
14
S. 626.914(4), F.S.
15
Id.
16
S. 626.916(1)(b), F.S.
17
S. 626.916(1)(c), F.S.
18
S. 626.916(1)(d), F.S.
19
S. 626.918, F.S.
20
Id. Alternatively, the insurer may be a wholly owned subsidiary of such an insurer.
21
Id.
22
S. 626.918(2)(b), F.S.
23
S. 626.918(2)(c), F.S. An alien insurer (insurer domiciled in a foreign country) must also have and maintain a trust fund
in the United States under terms approved by OIR, in an account of at least $5.4 million.
24
S. 626.918(2)(c)1.c., F.S.
25
S. 626.918(2)(c)1.d., F.S. STORAGE NAME: h0951e.COM PAGE: 4
DATE: 2/25/2022
The insurer must have a good reputation regarding service to its policyholders and payment of
losses and claims.
26
The management, officers, and directors of the insurer must meet the requirements of
competence and trustworthiness required by s. 624.404(3), F.S.
27
The Surplus Lines Law specifies that OIR does not have any duty to determine the actual financial
condition or claims practices of any unauthorized insurer.
28
OIR, when determining whether a surplus
lines insurer is eligible bases that decision on the insurer appearing to be financially sound and having
satisfactory claims practices, and not having any credible evidence to the contrary.
29
Requirement to Place Surplus Lines Insurance Through a Licensed Florida Surplus Lines Agent
A Florida-licensed surplus lines insurance agent must place surplus lines insurance policies.
30
A
Florida-licensed general lines agent may obtain licensure as a surplus lines agent if such an agent has
at least 1 year of experience working for a licensed surplus lines agent or successfully completes at
least 60 class hours in surplus and excess lines and passes a licensure exam.
31
This licensure is solely
for the purpose of placing property, marine, casualty, or surety coverages originated by general lines
agents with surplus lines insurers.
32
Nonresidents licensed in their home state as resident general lines and surplus lines agents may obtain
licensure as nonresident surplus lines agents if their home states have similar licensure requirements
as Florida and provide reciprocity regarding residents of Florida obtaining licensure as nonresident
surplus lines agents in those states.
33
Mandatory Disclosures
Surplus lines agents must disclose in writing that surplus lines insurance carriers do not have the
protection of the Florida Insurance Guaranty Association Act
34
and that surplus lines rates and policy
forms are not subject to regulation by any Florida agency.
35
When a policy is exported to surplus lines,
the insured must also sign or provide documented knowledge of the following disclosure:
You are agreeing to place coverage in the surplus lines market. Coverage may be
available in the admitted market. Persons insured by surplus lines carriers are not
protected under the Florida Insurance Guaranty [Association] Act with respect to
any right of recovery for the obligation of an insolvent unlicensed insurer.
36
The Florida Surplus Lines Service Office (FSLSO)
The FSLSO is a self-regulating, nonprofit association designed to act as a “self-regulating organization”
to permit better access by consumers to approved surplus lines insurers.
37
The FSLSO’s
responsibilities include monitoring activities and compliance of the licensed surplus lines agents
conducting business in Florida and of the eligible surplus lines insurers.
38
All Florida-licensed surplus
lines agents are deemed members of the FSLSO and must register with it.
39
26
S. 626.918(2)(d), F.S.
27
S. 626.918(2)(e), F.S.
28
S. 626.918(4), F.S.
29
Id.
30
See s. 926.927, F.S.
31
Id.
32
Id.
33
S. 626.9272, F.S.
34
Ss. 631.50– 631.70, F.S., are known as the Florida Insurance Guaranty Association Act, and establish the framework
for the Florida Insurance Guaranty Association.
35
S. 626.924, F.S.
36
S. 626.916(1)(e), F.S.
37
S. 626.921, F.S.
38
See id.
39
S. 626.921(2), F.S. STORAGE NAME: h0951e.COM PAGE: 5
DATE: 2/25/2022
The FSLSO must conduct the following activities:
Receive, record and review all surplus lines insurance policies;
Maintain records of the policies reported to the FSLSO and prepare reports as required by the
Financial Services Commission;
40
Prepare and deliver to each surplus lines agent quarterly reports of each agent’s business;
Collect and remit surplus lines tax to the Department of Financial Services;
Reconcile the policies provided by non-admitted insurers with the policies reports to the FSLSO
by agents; and
Other activities specified by statute.
41
Domestic Surplus Lines Insurance
Historically, surplus lines insurers generally are not permitted to write surplus lines insurance in their
states of domicile. However, some states have enacted laws authorizing domestic surplus lines
insurers (DSLI) in recent years. These are surplus lines insurers that offer surplus lines policies in their
states of domicile.
Prior to the creation of laws allowing DSLI, a surplus lines insurer seeking to transact surplus lines in its
state of domicile had to form a second company domiciled in a different state which would then offer
surplus lines policies in the original insurer’s state of domicile. Over 20 states have authorized DSLI.
42
A review of the state laws authorizing DSLI show that laws authorizing the formation of domestic
surplus lines insurance often have certain requirements in common:
The DSLI must meet a policyholder surplus requirement, usually $15 million or $20 million;
The DSLI must be an eligible surplus lines insurer in at least one jurisdiction other than its state
of domicile;
The board of directors of the DSLI must pass a resolution seeking to be a DSLI; and
The insurance commissioner of the DSLI must make it eligible in its state of domicile.
Certain commonalities are also present regarding how state and federal insurance laws generally
applicable to authorized insurers apply to DSLI:
DSLI are subject to the state’s solvency requirements for authorized domestic insurers, unless a
DSLI is specifically exempted;
DSLI are exempt from requirements relating to rates, forms, and policy cancellations;
Policies written by DSLI must be placed on the surplus lines market in accordance with the
requirements of the state’s surplus lines law; and
Policies written by DSLI are not covered by any of the state’s guaranty associations.
The number of DSLIs has increased from 15 in 2011, to over 70, with the majority domiciled in Illinois or
Delaware.
43
Federal Nonadmitted and Reinsurance Reform Act of 2010 (NRRA)
Pursuant to the NRRA, the surplus lines insurance and surplus lines brokers are subject only to the
statutory and regulatory requirements of the insured’s home state.
44
The NRRA provides that only the
home state of an insured may require any premium tax payment for surplus lines insurance.
45
States
40
The Financial Services Commission consists of the Governor, the Chief Financial Officer, the Attorney General, and the
Commissioner of Agriculture. S. 20.121, F.S.
41
See generally s. 626.921(3), F.S.
42
See e.g., Arizona (s. 20-407.01, Az. S.), Texas (s. 981.071-981.074, Tex. Ins. Code), and Vermont (s. 8 V.S.A. s.
5023a).
43
John N. Emmanuel and Zachary N. Lerner, Locke Lord Excess and Surplus Lines Laws Manual, p. 1.6 (2021),
https://surplusmanual.lockelord.com/ (last visited Feb. 02, 2022).
44
15 U.S.C. § 8202.
45
15 U.S.C. § 8201(a). STORAGE NAME: h0951e.COM PAGE: 6
DATE: 2/25/2022
are authorized to establish procedures to allocate tax revenues properly to other states for multi-state
risks and an insured’s home state may require surplus lines brokers and insureds to file annual tax
allocation reports detailing the portion of the policy premium attributable to the exposure located each in
state.
States must participate in the National Association of Insurance Commissioners’ (NAIC) database or an
equivalent uniform national database for the licensure of surplus lines brokers, and a state that does
not participate is prohibited from collecting fees related to licensing surplus lines brokers.
46
Unless a
state adopts requirements that comply with the NRRA’s requirements regarding allocation of
nonadmitted premium taxes that include alternative nationwide uniform eligibility requirements, the
eligibility requirements for a state’s surplus lines insurers must conform to the NAIC’s Non-Admitted
Insurance Model Act.
47
The NRRA also prohibits state laws from requiring a due diligence search to
determine if the insurance can be obtained from an admitted insurer before placing a risk for an exempt
commercial purchaser
48
on the surplus lines market if certain disclosures are made.
49
Florida Insurance Guaranty Association (FIGA)
FIGA provides a “mechanism for the payment of covered claims under certain insurance policies to
avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of
the insolvency of an insurer.”
50
It issues guaranty fund payments and provides related services for all
lines of property and casualty insurance
51
with certain exceptions.
52
FIGA is only obligated to pay the
portions of claims made to insolvent property and casualty insurers, which are less than $300,000.
53
For policies providing homeowners insurance, FIGA provides for up to an additional $200,000 for the
portion of a covered claim, which relates to damage to structure and contents.
54
Florida Life and Health Insurance Guaranty Association (FLAHIGA)
FLAHIGA exists to “protect policyholders, insureds, beneficiaries, annuitants, payees, and assignees of
life insurance policies, health insurance policies, annuity contracts, and supplemental contracts, subject
to certain limitations, against the future of an insurer issuing such policies or contracts to perform its
contractual obligations due to its impairment or insolvency.”
55
The maximum obligation of FLAHIGA to
provide payment for any covered claim or policy is the following:
For life insurance, $100,000 in net cash surrender and net cash withdrawal values.
For deferred annuity contracts, $250,000 in net cash surrender and net cash withdrawal values.
For basic hospital expense health insurance policies, basic medical-surgical health insurance
policies, or major medical expense health insurance policies, but not including long-term care
policies, $500,000.
For all other benefits, including in long-term care policies, $300,000, including cash values.
56
Florida Workers’ Compensation Insurance Guaranty Association (FWCIGA)
FWCIGA “provides a mechanism for the payment of covered claims” under ch. 440, F.S., to avoid delay
46
15 U.S.C. § 8203.
47
15 U.S.C. § 8204.
48
15 U.S.C. § 8206(5) defines a commercial purchaser as a person purchasing commercial insurance if such person has
a qualified risk manager to negotiate insurance coverage, has paid nationwide property and casualty insurance premiums
in excess of $100,000 in the preceding 12 months, and meets one of five specified requirements regarding net worth,
annual revenues, number of employees, not-for-profit annual budgeted expenditures, or status as a municipality.
49
15 U.S.C. § 8205.
50
S. 631.51, F.S.
51
S. 631.57(3)(a), F.S. As established in s. 632.52, F.S., FIGA covers “all kinds of direct insurance” with certain
exceptions, such as life, annuity, health, disability, workers’ compensation, and surplus lines insurance.
52
Id.
53
S. 631.57(1), F.S.
54
Id.
55
S. 631.712, F.S.
56
S. 631.717(12), F.S. STORAGE NAME: h0951e.COM PAGE: 7
DATE: 2/25/2022
and financial loss to claimants due to the insolvency of a workers’ compensation insurer.
57
FWCIGA
services workers’ compensation claims against insolvent workers’ compensation insurers
58
and self-
insurance funds.
59
For purposes of FWCIGA, “covered claim” includes unpaid claims under any
employer liability coverage of a workers’ compensation policy limited to the lesser of $300,000 or the
limits of the policy.
60
Effect of the Bill
The bill defines “domestic surplus lines insurer” as a nonadmitted insurer domiciled in this state that
OIR has deemed eligible and authorized to write surplus lines insurance. The bill creates a statutory
framework to allow a DSLI to issue surplus lines policies in this state, in addition to issuing policies in
other jurisdictions, by establishing the following:
The term “nonadmitted insurer” has the same meaning as provided in the NRRA.
A nonadmitted insurer possessing a policyholder surplus of at least $15 million may be authorized
to transact insurance as a DSLI under a resolution by its board and with approval of OIR. The DSLI
must maintain this surplus at all times.
Such nonadmitted insurers are authorized to write surplus lines insurance in any jurisdiction,
including this state, and that this authorization is not contingent upon holding a certificate of
authority.
A DSLI shall be deemed an eligible surplus lines insurer and be included in the list of eligible
surplus lines insurers required under current statutes.
Eligible surplus lines insurers may write any kind of insurance that unauthorized insurers not
domiciled in this state are eligible to write.
A DSLI is an unauthorized insurer for the purposes of writing surplus lines insurance under the
Surplus Lines Law.
A DSLI is a nonadmitted insurer for the purposes of the federal NRRA.
A DSLI may only write surplus lines insurance in Florida and may only sell policies through a
surplus lines agent.
All requirements imposed by the Florida Insurance Code on admitted domestic insurers apply to DSLI
unless the DSLI are otherwise specifically exempted.
A policy issued by a DSLI is exempt from all statutory requirements relating to insurance rating,
policy forms, premiums, cancellations, nonrenewals, and renewals, and from any other statutory
requirements that do not apply to surplus lines policies issued by surplus lines insurers domiciled in
another state.
A policy issued by a DSLI is subject to taxes assessed on surplus lines policies issued by
nonadmitted insurers, including surplus lines premium taxes, but it is not subject to other taxes
levied upon domestic or foreign admitted insurers.
A policy issued by a DSLI is not subject to the protections or requirements of FIGA, FLAHIGA, or
FWCIGA.
A DSLI may not issue a homeowners policy covering residential property located in Florida if such
policy was non-renewed or cancelled by an admitted insurer’s affiliate within twelve months
following the effective date of the non-renewal or cancellation.
A DSLI may not issue a policy designed to satisfy motor vehicle financial responsibility, workers’
compensation coverage, or any other Florida law mandating insurance coverage by an admitted
insurer.
57
S. 631.902, F.S.
58
“Insurer means an insurance carrier or self-insurance fund authorized to insure under ch. 440, F.S. For the purposes of
this act, ‘insurer’ does not include a qualified local government self-insurance fund, as defined in s. 624.4622 or an
individual self-insurer as defined in s. 440.385.” S. 631.904(5), F.S.
59
“‘Self-insurance fund’ means a group self-insurance fund authorized under s. 624.4621, a commercial self-insurance
fund writing workers’ compensation insurance authorized under s. 624.462, or an assessable mutual insurer authorized
under s. 628.6011. For purposes of this act, the term “self-insurance fund” does not include a qualified local government
self-insurance fund, as defined in s. 624.4622, an independent educational institution self-insurance fund as defined in s.
624.4623, an electric cooperative self-insurance fund as described in s. 624.4626, or an individual self-insurer as defined
in s. 440.385.” S. 631.904(6), F.S.
60
S. 631.904(2), F.S. STORAGE NAME: h0951e.COM PAGE: 8
DATE: 2/25/2022
The bill also contains technical amendments to several statutes to conform cross-references to this
new statutory framework.
B. SECTION DIRECTORY:
Section 1. Amends s. 626.914, F.S., relating to definitions.
Section 2. Creates s. 626.91805, F.S., relating to domestic surplus lines insurers.
Section 3. Amends s. 458.320, F.S., relating to financial responsibility.
Section 4. Amends s. 459.0085, F.S., relating to financial responsibility.
Section 5. Amends s. 464.0123, F.S., relating to autonomous practice by an advanced practice
registered nurse.
Section 6. Amends s. 629.401, F.S., relating to insurance exchange.
Section 7. Provides an effective date of July 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
The Revenue Estimating Conference has not estimated the potential revenue impacts of the bill.
Staff estimates that the bill may have a positive/negative indeterminate impact on General Revenue
and state trust fund revenue. The potential revenue impacts may be indirect. The impact may be
positive if the bill leads to additional policies being written in the state, resulting in increased surplus
lines tax collections. The impact may be negative if additional competition leads to lower premium
rates overall, resulting in decreased surplus lines tax collections.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
To the extent that consumers have additional options for coverage from surplus lines carriers which
results in more competitive insurance rates, the bill may have a positive indeterminate impact on the
private sector.
D. FISCAL COMMENTS:
None. STORAGE NAME: h0951e.COM PAGE: 9
DATE: 2/25/2022
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking.
C. DRAFTING ISSUES OR OTHER COMMENTS:
The bill as drafted is unclear regarding exactly which parts of the Florid Insurance Code are meant to
apply to a DSLI. The bill also lacks clarity regarding when a DSLI is prohibited from issuing a policy for
a homeowner whose previous policy was nonrenewed or cancelled within 12 months by an admitted
carrier.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On February 23, 2022, the Commerce Committee considered the bill, adopted one amendment, and
reported the bill favorably as a committee substitute. The amendment made the following changes to the
bill:
Clarified that a DSLI is not considered an authorized insurer as that term is defined in the Insurance
Code, but is authorized to write surplus lines insurance in any jurisdiction including Florida.
Established that a DSLI must maintain a surplus of at least $15 million at all times.
Clarified that a DSLI may not hold a certificate of authority authorizing it to operate as an admitted
insurer.
Established that a DSLI may not issue a homeowners policy covering residential property located in
Florida if such policy was non-renewed or cancelled by an admitted insurer’s affiliate within twelve
months following the effective date of the non-renewal or cancellation.
Established that a DSLI may not issue a policy designed to satisfy motor vehicle financial
responsibility, workers’ compensation coverage, or any other Florida law mandating insurance
coverage by an admitted insurer.
The analysis is drafted to the committee substitute as passed by the Commerce Committee.