Florida has taken a significant step in the insurance landscape by passing new legislation that removes the requirement for agents to demonstrate diligent effort when placing policies in the non-admitted, or surplus lines, market. This change, enacted through House Bill 1549, aims to simplify the process for both agents and consumers seeking insurance coverage.
Previously, agents had to obtain three declinations from admitted carriers before they could turn to the surplus lines market for coverage. For residential properties valued at $700,000 or more, only one declination was necessary. With the new law, these requirements are eliminated, making it easier for agents to find suitable insurance options for their clients.
The Florida Surplus Lines Service Office has expressed optimism about the bill, noting that it will enhance consumer access to insurance. By cutting down on repetitive paperwork and streamlining the placement process, the legislation is expected to offer more choices to consumers and expedite the insurance acquisition process.
In addition to these procedural updates, the law also clarifies disclosure requirements. It states that surplus lines insurance products do not need to be approved by state regulators regarding their rates or forms. Once a policy is issued, it is assumed that the insured understands and accepts these terms.
This legislative change comes at a time when Florida’s surplus lines market is experiencing significant growth. In February 2024 alone, premiums soared by $507 million compared to the same month in 2023, marking a 66% increase. The number of policies written also rose by nearly 41%, with about 128,500 new policies issued that month. Overall, surplus lines now account for 21% of the state’s property insurance market, putting Florida just behind Louisiana, which holds 23%.
The rise in surplus lines usage reflects a national trend in states facing increased risks from natural disasters. As traditional insurers withdraw from high-risk areas, more consumers are turning to surplus lines carriers for coverage. Additionally, insurers that meet certain criteria, such as maintaining a strong financial rating and working with Florida-based brokers, can now participate in the Citizens Property Insurance Corporation’s depopulation program.
This move by Florida aims to provide better insurance solutions for residents, especially in a time when reliable coverage is increasingly hard to find. As the market evolves, consumers can expect more options and faster access to necessary insurance products.