Surplus Lines Placement and Regulation
The placement sequence
Surplus lines is the placement of coverage with an insurer not authorized in Florida when the admitted market cannot or will not write the risk. A Florida-licensed surplus lines agent must first make and document a diligent effort to place the risk with authorized insurers. Florida's working rule is to contact at least three authorized insurers that write the type of coverage; keep documentation of declinations or insufficient quotes. Some coverages are exempt from diligent effort, so confirm current Florida law and FSLSO guidance.
Eligible insurer and FSLSO
The placing insurer must be an eligible surplus lines insurer on the FSLSO list. After placement, the agent must file the policy or declaration with the Florida Surplus Lines Service Office (FSLSO), which collects surplus lines premium tax and the service fee and maintains compliance records. The insured must receive a disclosure that the insurer is not authorized in Florida and is not covered by the Florida Insurance Guaranty Association.
Traps
- Placing with a non-eligible insurer because it offered a lower price.
- Skipping diligent effort when the coverage is not exempt.
- Assuming FIGA backs the policy.
- Treating FSLSO as an insurer or producer.
- Failing to disclose the unauthorized status.
Worked example
A contractor needs coverage for a high-hazard operation. The agent contacts three authorized insurers; all decline. The agent documents the declinations, places coverage with an eligible surplus lines insurer, files with FSLSO, collects the premium tax/service fee, and delivers the unauthorized-insurer disclosure. If the agent had placed with an insurer not on the eligible list, the placement would violate Florida surplus lines rules even if the price was better.
Rule of thumb: no diligent effort documentation → no surplus lines placement, unless an exemption applies.