Arbitration clauses primarily found in surplus lines policies with a choice of law provision generally selecting New York law and a shortened statute of limitations are a trap for unwary public adjusters and attorneys. A recent federal appellate court case upheld such a clause despite a state law making it illegal. The holding of the case suggests just how complicated of a legal issue this is:

This appeal presents an issue of first impression in this circuit that lies at the intersection of international, federal, and state law: whether the McCarran-Ferguson Act, 15 U.S.C. §§ 1011–15, allows a Washington statute to reverse-preempt the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, a multilateral treaty. We conclude that the relevant provision of the Convention is self-executing, and therefore not an “Act of Congress” subject to reverse-preemption by the McCarran-Ferguson Act. Accordingly, we affirm the district court’s order compelling arbitration.1

Continue Reading Public Adjusters Beware of Arbitration Clauses Changing State Law

We are sometimes asked, what is a surplus lines carrier? This usually happens when working on a case involving Lloyds of London, since it is the biggest surplus line “player.” I used the phrase “player” because Lloyds is not truly an insurance carrier, but an exchange where insurance is bought and sold.
Continue Reading What are Surplus Lines Carriers and How Are They Different From Admitted Carriers?

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.
Continue Reading Excess and Surplus Lines Insurers Are Ignoring Florida’s Insurance Commissioner Notice To Do Whatever It Takes

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.
Continue Reading Surplus Lines Carriers Select Arbitration and Choice of Law in New York to Pay Less Coverage and Less on Claims

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.
Continue Reading 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

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.

Continue Reading Are Surplus Lines Carriers Responsible for Attorney’s Fees in Florida?

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.

Continue Reading Surplus Lines Insurers Are Not Always “Relieved” To Be Free From Regulation Under The Florida Insurance Code

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.

Continue Reading Care Must Be Taken To Be Sure Surplus Insurance Policies Meet The Consumers’ Needs And Do Not Contain Surprises

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:

Continue Reading Surplus Lines Insurance; Bridging The Gap In Coverage

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.

Continue Reading Surplus Lines Bill (HB 245) Likely Dead Following Addition of Pro-Consumer Amendments