Florida has passed legislation that eliminates the state’s diligent effort requirement for agents seeking to place insurance policies in the non-admitted, or surplus lines, market.
The move is intended to streamline access to surplus lines coverage and reduce administrative hurdles.
Previously, insurance agents in Florida were required to obtain three declinations from admitted carriers before turning to the surplus lines market. For residential structures with replacement costs of $700,000 or more, only one such declination was required.
House Bill 1549 removes these requirements, aiming to simplify the placement process and improve access for consumers. The Florida Surplus Lines Service Office stated that the bill will expand consumer options, cut down on repetitive documentation, and enable quicker placement of coverage in the surplus lines market.
In addition to the procedural changes, the bill revises disclosure requirements to clarify that surplus lines insurance products are not subject to rate or form approval by state regulators. Once the policy is issued, it is presumed the insured has acknowledged and accepted these terms.
Florida's surplus lines market saw a remarkable surge in 2024. In February alone, premiums increased by $507 million compared to the same month in 2023, representing a 66% rise. Policy counts also climbed by nearly 41%, or approximately 128,500 policies for the month.
New business and renewals experienced about a 40% uptick, indicating robust demand in the sector.
Florida's surplus lines market has grown to account for 21% of the state's property insurance sector. This is slightly below Louisiana's 23% but above California's 14%.
The increase in surplus lines usage in Florida reflects a broader trend in states facing heightened catastrophe risks, where traditional insurers have reduced their presence, leading to a greater reliance on surplus lines carriers.
Additionally, surplus lines insurers meeting specific criteria, such as holding an "A-" financial strength rating from AM Best and having a residential risk program managed by a Florida-based surplus lines broker, are now permitted to participate in the Citizens Property Insurance Corporation's depopulation program.
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