2.3 Service of Process on Unauthorized and Surplus Lines Insurers

Service of process is how a lawsuit is formally delivered to a defendant. An insurer with no Florida certificate of authority and no Florida office would be hard to sue here, so the Legislature built two process systems: the Unauthorized Insurers Process Law (ss. 626.904 to 626.912) for insurers doing business illegally, and s. 626.937 for eligible surplus lines insurers. In both, the key figure is the Chief Financial Officer (CFO) acting as process agent.

The Unauthorized Insurers Process Law

Purpose: s. 626.905

The law subjects unauthorized insurers, and persons representing or aiding them, to the jurisdiction of Florida courts in suits by or for insureds and beneficiaries. The Legislature found it an "often insuperable obstacle" for residents to sue distant insurers. It relies on the McCarran-Ferguson Act (Pub. L. No. 15, 79th Congress), which leaves insurance regulation to the states. The law is to be interpreted to make it uniform with other states that adopt it (s. 626.904).

Acts that appoint the CFO: s. 626.906

Any of these acts in Florida, by mail or otherwise, by an unauthorized foreign or alien insurer or a person representing or aiding it, constitutes appointment of the CFO as its agent for service of process in suits by or for an insured or beneficiary:

1. issuing or delivering insurance contracts to Florida residents or to corporations authorized to do business here;
2. soliciting applications;
3. collecting premiums, membership fees, assessments, or other consideration; or
4. any other transaction of insurance.

How service works: s. 626.907

Defending the suit: ss. 626.908 to 626.911

• Before filing any pleading, the unauthorized insurer must either obtain a certificate of authority or post cash, securities, or a bond in an amount set by the court to secure payment of a final judgment. The court may waive the deposit if the insurer shows it holds sufficient funds in a U.S. state and will pay any judgment without further suit.
• The insurer may move within 30 days after service to quash service on the ground that it did not perform any act listed in s. 626.906.
• The office or department may bring its own enforcement actions, and transacting business also appoints the Secretary of State as process agent for those state proceedings (s. 626.909). That state-action provision does not apply to surplus lines insurance written under the Surplus Lines Law.
• Civil penalties: up to $1,000 for each nonwillful violation and up to $10,000 for each willful violation (s. 626.910).
• If the insurer fails for 30 days after demand to pay according to the contract, the court must award the plaintiff a reasonable attorney's fee (s. 626.911).
• Exemptions (s. 626.912): the process law does not apply to suits on reinsurance, wet marine and transportation, commercial aircraft, or railway risks; to property with a permanent situs outside Florida; or to Surplus Lines Law contracts when the insurer enters a general appearance or the contract designates the CFO or a Florida resident agent for process.

Surplus Lines Insurers: s. 626.937

Eligible surplus lines insurers are handled more simply:

• An unauthorized insurer may be sued on any cause of action arising in Florida under a surplus lines contract, or under a certificate, cover note, or confirmation the surplus lines agent issued, using the same procedure as for authorized insurers under s. 624.423.
• By accepting the risk or issuing the policy, the insurer is deemed to have appointed the CFO as its agent for service of process.
• Each insurer requesting eligibility under s. 626.918 must file with the department a formal appointment of the CFO. The appointment is irrevocable, binds successors in interest, and lasts as long as any Florida obligation of the insurer remains outstanding.
• At the time of appointment, the insurer designates the name and e-mail address of the person to whom process will be made available through the department's secure online portal. It may change that designation by a new filing.
• These methods are cumulative with any other lawful method of service.

Authorized-insurer procedure: s. 624.423

Service on the CFO is made electronically. The CFO records it and makes the process available through the department's secure online portal to the insurer's designee. The insurer need not answer or plead until 20 days after the CFO sends or makes the process available.

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