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You may be aware that The Department of Financial
Services had an article in the February edition of
"The Pulse" entitled "Surplus Lines: Placing
Coverage Properly versus Improperly".
This article was essentially
the same as an opinion letter DFS had issued regarding
the ability to export risks to surplus lines carriers.
In this letter, they stated that "a surplus lines
agent cannot export insurance coverage for a person's
risk when the risk is already covered by, or can be
covered by, an admitted/authorized insurer." It further
goes on to state "for example, if an admitted/authorized
insurer were willing to write a homeowner's insurance
policy excluding wind coverage, then, provided all the
requirements of Section 626.916, Florida Statutes, have
been fulfilled, the surplus lines agent would be
permitted to export the wind coverage, and only the wind
coverage."
The opinion letter does not reflect how insurance is
transacted now or has been in the past and this
interpretation would do great harm to the insurance
industry, including retail agents, surplus lines agents
and most importantly insureds. If followed it would
create turmoil in the marketplace and force insureds
into a position where they are either unable to obtain
insurance adequate for their needs or will have no
choice but to pay far higher costs.
The Florida Surplus Lines Association does not agree
with this opinion which we feel is incorrect and
inconsistent with prior interpretations by the
Department. We are working with other trade groups,
the DFS and OIR to attempt to remedy this.
We will keep you advised of further developments in the
near future
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