Florida Insurance Commissioner David Altmaier

One of the strongest worded notices to insurance companies to pay promptly and do whatever it takes to help policyholders following a disaster came from Florida Insurance Commissioner David Altmaier in a December 19, 2018 memorandum entitled Hurricane Michael Claims Response.
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A Florida based insurance agent educator asked me for my thoughts about how arbitration clauses harm policyholders and provide less coverage. He was referencing my earlier post this week, Arbitration Clause Requiring New York Law and New York Arbitration Cited as Avoidance of Florida Lawsuit—Another Instance of Surplus Lines Insurer Abuse in Florida.
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Insurance Law360 is part of my daily reading and it tipped me off to a case which raises the same problem about arbitration, I noted in Should Insurance Agents Get Sued for Selling Insurance Which Requires Arbitration in a Far Away Location and Deprives Their Customers of Consumer Protection Laws? and Arbitration Is an Increasing Trend Found Within Property Insurance Policies, and Arbitration is Not Appraisal.
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Policyholders and their advocates are fully aware that authorized carriers may be found liable for attorneys’ fees under Florida Statute 627.428, which provides:

(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.


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In May 2012, in Surplus Lines Insurance; Bridging The Gap In Coverage, we wrote about surplus lines insurance and how it is regulated by the Surplus Lines Law.1 Free from the rate and form regulations which govern authorized insurers, the surplus lines industry can fill the gaps in available insurance for Florida residents. In a recent order, the U.S. District Court for the Southern District of Florida ruled that the provisions within Florida Statute 627.409 are inapplicable to surplus lines insurers.2 Florida Statute 627.409 deals with misrepresentations of material facts in policy applications, and has some insurance friendly language regarding the insurer’s burden of proof.


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On June 30, 2012, Nicole Vinson wrote, Florida’s 3rd DCA Limits a Major Water Loss to $25,000. In her post, Nicole discussed how the Third District Court of Appeal had to decide whether an insurance policy endorsement limitation applied to limit the damages from a substantial water loss event to $25,000. The case was Certain Interested Underwriters at Lloyd’s London v. PITU, Inc., No. 11-2233, 2012 WL 2400869 (Fla. 3d DCA June 27, 2012). Additionally, at play in the case is the fact that Lloyd’s is a surplus lines insurer. Surplus lines insurers do not have the strict form and rate requirements in Florida that admitted insurers must comply with. The surplus lines market is intended to provide coverage that cannot be easily procured in the conventional insurance marketplace. What this means for the consumer, is that extra care must be taken to ensure a surplus insurance policy meets their needs and expectations and does not contain any surprises.


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Most insurance coverage in Florida is provided by insurers “admitted” to provide coverage in the state, meaning those companies licensed to transact insurance in Florida. “Surplus lines” insurance refers to a category of insurance for which there is no market available through insurance carriers in the admitted market. Surplus lines insurance is intended to fill a gap–to provide access to insurance coverage for risks that admitted or “authorized” carriers refuse to insure and for which there would otherwise be no coverage:


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After being postponed every day for more than a week, House Bill 245 was finally heard in the Senate yesterday. Though the bill eventually passed, it was not before several significantly pro-consumer amendments were tacked on. The resulting version of the bill, which passed its third and final reading in the Senate today, is far less dangerous to Florida policyholders than the original draft.


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Surplus insurers in Florida, a/k/a “non-admitted” insurers, have traditionally been exempted from certain regulatory schemes applicable to traditional “admitted” insurers. This was done to persuade these non-admitted carriers to continue to write insurance on risks not as attractive to the admitted carriers. As pointed out by Dick Tutwiler in his comment to my November 1, 2010, post, Eligibility Requirements for Florida Surplus Lines Insurance Carriers, two 2008 court decisions threatened the stability of the surplus lines insurance market in Florida.

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