The Carrier That Wasn't on the List
A Tampa agency insures a three-location restaurant group: commercial property at $1.4 million total insured value plus general liability. The admitted market has been difficult - the file contains written declinations from two authorized carriers (one citing roof age, one citing the liquor exposure). A wholesaler offers a quote from Meridian Specialty Insurance Company at $41,500, roughly 22 percent below the last admitted quote. Meridian is a foreign insurer, has never been licensed in any U.S. state, and the producer cannot find it on the Office of Insurance Regulation's current eligible surplus lines insurer list. The insured's bank requires continuous property coverage and the current policy expires in nine days. The insured says, "I don't care who writes it - have me sign whatever waiver you need."
1. May the producer place the account with Meridian Specialty? Explain the analysis and whether the insured's signed waiver changes it.
Read the worked answer
No. Eligibility is a statutory gate, not a matter of insured consent.
- Florida's surplus lines law permits placement only with an eligible surplus lines insurer - one that appears on the list maintained by the Office of Insurance Regulation (s. 626.918, F.S.). A surplus lines agent may not place business with an insurer that is not on that list (s. 626.919, F.S.).
- Meridian has never been licensed anywhere and is not on the list, so any placement would be unauthorized insurance written through a surplus lines agent - precisely what the surplus lines mechanism does not authorize. The insured's waiver cannot convert an ineligible carrier into an eligible one; consent only addresses the disclosure of authorized vs. unauthorized status, not the insurer's eligibility.
- Separately, the diligent-effort file looks thin. Florida requires documented evidence that the risk was shopped to authorized insurers before going to the surplus lines market; two declinations may not satisfy the standard, and the file has no documentation of the coverage's status on the export list. Confirm the current declination threshold in s. 626.914, F.S., before relying on this file.
The correct path is to keep marketing to eligible surplus lines insurers (the eligibility list is published/updated by OIR, so re-check it near the effective date), or to check whether this coverage type sits on Florida's export list, which can relieve the declination search but never the eligibility requirement.
2. The insured insists on Meridian anyway and offers to sign a statement acknowledging the carrier is not authorized. What should the producer do, and what exposure does the agency create by going along?
Read the worked answer
Recommended action: decline to place, put the refusal and the reason in writing to the insured, and continue the search among eligible and authorized markets.
Why going along is a bad trade:
- Licensing exposure. Placing with a non-eligible insurer is a violation of the surplus lines statute and grounds for disciplinary action against the agency and the individual surplus lines agent, up to and including revocation.
- No FIGA backstop. Florida Insurance Guaranty Association protection does not extend to unauthorized insurers, so the insured would have a promise with no insolvency safety net - a material fact the agency would be concealing if it stayed silent.
- Professional liability. If the carrier fails to pay a covered claim, the insured's likeliest theory is that the agency placed coverage it had no authority to place and failed to explain the consequences. A signed acknowledgement of unauthorized status is weak protection against a claim of ineligible placement.
- Tax and reporting problems. Premium tax and surplus lines reporting assume a lawful surplus lines placement; the transaction would be tainted from the outset.
Practical compromise: document the deadline pressure, offer a short-term alternative (an eligible surplus lines carrier at higher premium, or a named-peril or higher-deductible admitted option), and confirm the bank's requirements in writing so the insured understands the real cost of the gap.