Volume 2, No. 5 - July 2011

In The Know

- Keeping you informed is what it's all about

2011 Legislative Session Update

HB 1087 - Insurance and HB 99 - Commercial Insurance Rates

Diligent Effort Changes

Effective July 1, 2011, the law changed regarding the surplus lines diligent effort requirement. You are no longer required to perform a diligent effort or complete a diligent effort form prior to quoting or binding surplus lines policies for certain classes of business. In addition, the other requirements listed under section 626.918, Florida Statutes, no longer apply to these classes. You will be required to obtain a consent form to be signed by the insured advising them that the coverage is quoted with a surplus lines carrier.

The classes which this exemption applies to are as follows:

  • Excess or umbrella
  • Surety and fidelity
  • Boiler and machinery and leakage and fire extinguishing equipment
  • Errors and omissions
  • Directors and officers, employment practices and management liability
  • Intellectual property and patent infringement liability
  • Advertising injury and Internet liability insurance
  • Property risks rated under a highly protected risks rating plan

Effective October 1, 2011, the following classes are added to the exemption:

  • Fiduciary liability
  • General liability
  • Nonresidential property, except for collateral protection insurance as defined in s. 624.6085
  • Nonresidential multiperil
  • Excess property
  • Burglary and theft

Classes of business other than those listed above, including property coverage for apartment and condominium buildings and all personal lines continue to be subject to s. 626.918, F.S., and you will still need to go through the diligent effort process including completing a diligent effort form.

A form established by the FSLSO is available at FSLSO.com. You can review their Disclosure Matrix y Sample Surplus Lines Disclosure.

The new law does not reference a specific form but FSLSO developed this one and it is recommended that you use it. Remember, it is the original producing agent's responsibility to obtain the insured's signature and retain the form. For more information on this subject you should review the links to the legislation further down.

Aprendices de Tasador Público

Applicants for a public adjuster apprentice license now have two additional adjuster designations, Certified Adjuster (CA) and Certified Claims Adjuster (CCA), from which to choose in order to qualify for licensure, among other requirements.

Solicitantes de Licencia, con Delitos Penales

Prohibición Permanente:

Se prohíbe de forma permanente, a aquellas personas que hayan cometido determinados delitos graves, solicitar una licencia. Para otros tipos de delitos graves y ciertos delitos menores, los solicitantes deberán esperar que transcurra el período de inhabilitación antes de solicitar una licencia. La prohibición permanente y los períodos de inhabilitación se aplican independientemente del hecho de que el fallo se haya ocultado o que se hayan restituido los derechos civiles del solicitante.

  • Se prohíbe de manera permanente solicitar una licencia a toda persona que haya cometido un delito grave de primer grado, un delito de pena capital, un delito relacionado con el lavado de dinero, fraude o malversación de fondos, o un delito que esté directamente relacionado con la actividad de servicios financieros. Esta prohibición se aplica a condenas, declaraciones de culpabilidad o declaraciones nolo contendere, independientemente del fallo, por parte de cualquier solicitante, director, dueño mayoritario, socio, gerente u otra persona que dirija o controle a un solicitante.
    • The term "financial services business" means any financial activity regulated by the Florida Department of Financial Services, the Florida Office of Insurance Regulation, or the Florida Office of Financial Regulation.
    • The terms "felony of the first degree" and "capital felony" include all felonies designated as such by the Florida Statutes, as well as any felony so designated in the jurisdiction in which the plea was entered or judgment was rendered.

Períodos de Inhabilitación:

The following disqualifying periods must be met prior to application to be considered for licensure and the disqualifying periods begin upon the applicant's final release from supervision or upon completion of the applicant's criminal sentence:

  • Existe un período de inhabilitación de 15 años para todos los delitos graves que supongan bajeza moral que no estén específicamente incluidos en la prohibición permanente, mencionada anteriormente.
  • Existe un período de descalificación de 7 años para todos los delitos graves que no están enmarcados dentro de la prohibición permanente o el período de inhabilitación de 15 años.
  • Existe un período de inhabilitación de 7 años para todos los delitos menores que están directamente relacionados con la actividad de servicios financieros.

Please note: Aggravating and mitigating factors can affect the true length of a disqualifying period. However, mitigation may not result in a disqualifying period less than 7 years and may not mitigate the disqualifying periods entirely. The disqualifying periods begin upon the applicant's final release from supervision or upon completion of the applicant's criminal sentence, including payment of fines, restitution, and court costs for the crime for which the disqualifying period applies. After the disqualifying period has been met, the burden is on the applicant to demonstrate that the applicant has been rehabilitated, does not pose a risk to the insurance-buying public, is fit and trustworthy to engage in the business of insurance pursuant to s. 626.611(7), Estatutos de la Florida, y está calificado para la licencia.

El hecho de que el solicitante cumpla con las condiciones mencionadas anteriormente no garantiza que se le concederá la licencia.

[See Chapters 2011-160 y 2011-174, Laws of Florida]

SB 1816 - Surplus Lines Insurance

Florida joins other states around the country in bringing its surplus lines business in line with the federal Nonadmitted and Reinsurance Reform Act (NRRA).

SB 1816 was signed into law authorizing the Florida Office of Insurance Regulation to enter into a multi-state agreement for the collection of non-admitted insurance taxes as outlined by the NRRA.

SB 1816 includes changes that affect Florida's surplus lines agents. With regards to agent invoicing procedures, SB 1816 provides that the billing and payment of the Florida Surplus Lines Service Office fee will be moved to a quarterly basis which aligns it with the current tax and assessment billing cycle. It amends the payment schedule for independently procured coverage policies to quarterly, as well.

Additionally, the bill aligns the filing deadline for Florida surplus lines agents' quarterly report affidavit with the payment of all surplus lines taxes, fees and assessments, requiring the filing to be made on or before the 45th day following each calendar quarter.

For multi-state policies effective on or after July 21, 2011, surplus lines agents will file the total policy premium with the home state of the insured as per the NRRA. SB 1816 provides that for multi-state risks for which Florida is the home state, the total policy premium will be taxed at the rate of the state where the risk or exposure is located. This provision is specific only to taxes; Florida assessments and fees will be charged on the gross premium of the multi-state risk.

The Florida Surplus Lines Service Office has a seminario web y other information to assist surplus lines agents in understanding and complying with this new legislation.

[See Chapter 2011-46, Laws of Florida]

Clarification on Public Adjusters, Contractors, and Conflict of Interest

En last month's issue, it was mentioned that legislation passed in SB 408 (Chapter 2011-39, Laws of Florida) requires a licensed contractor to be licensed as a public adjuster in order to adjust a claim on behalf of the insured (effective January 1, 2012). The legislation states in ss. 626.854(16), F.S., that a licensed contractor or subcontractor is prohibited from adjusting a claim on behalf of an insured with regard to residential property insurance policies and condominium unit owner policies if such contractor or subcontractor is not a licensed public adjuster.

A person licensed as both a public adjuster under Chapter 626 and contractor under Chapter 489 may not serve in both capacities for the same loss. Section 626.8795, Florida Statutes, prohibits a public adjuster from participating "directly or indirectly, in the reconstruction, repair, or restoration of damaged property that is the subject of a claim adjusted by the licensee." Further, a public adjuster "may not engage in any other activities that may be reasonably construed as a conflict of interest, including soliciting or accepting any remuneration from, of any kind or nature, directly or indirectly; and may not have a financial interest in any salvage, repair, or any other business entity that obtains business in connection with any claim that the public adjuster has a contract or an agreement to adjust."

 

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