4.1 The Florida Surplus Lines Service Office (s. 626.921)

The Florida Surplus Lines Service Office (FSLSO) sits at the center of day-to-day compliance. Section 626.921 creates it, defines its duties, fixes the makeup of its board, and makes every licensed surplus lines agent a member. Expect questions on who regulates the FSLSO, who sits on its board, what it collects, and what information it must keep confidential.

What the FSLSO Is

Section 626.921(1) creates a nonprofit association called the Florida Surplus Lines Service Office. The Legislature called it a self-regulating organization needed to give consumers better access to approved unauthorized insurers. The section must be construed liberally to promote its purposes: to protect consumers, permit placement with approved surplus lines insurers, promote orderly access to the market, expand the products available, advise consumers, agents, insurers, and government agencies, and protect the revenues of this state.

Membership and Reporting: s. 626.921(2)

• As a condition of holding a surplus lines license, every surplus lines agent is deemed a member of the association. Membership is not optional.
• Each agent must report to and file with the service office a copy of, or information on, each surplus lines policy or document, as the plan of operation provides.
• The service office must immediately report the particulars of any unfiled policy to the department (DFS) for enforcement.

Who Regulates the FSLSO

The association is regulated by the office (OIR). It is subject to the Insurance Code, to rules of the Financial Services Commission, and, as to surplus lines agents, to rules of the department. The office examines the association as often as it considers necessary. The association pays the cost of those examinations, and its governors, officers, and employees may be examined under oath.

Statutory Duties: s. 626.921(3)

The reconciliation duty matters in practice. Insurers report their Florida surplus lines business to the FSLSO under s. 626.931, and the FSLSO matches those reports against agent filings. A policy an agent never filed will surface in the reconciliation and be reported to DFS.

The Board of Governors: s. 626.921(4)

The FSLSO operates under a nine-member board of governors.

Members serve 3-year terms at the pleasure of the department. The initial terms were staggered so that three appointments expire each year, and members may be reappointed.

Plan of Operation and Agent's Manual: s. 626.921(5)

• The association submits a plan of operation and amendments to the office, and they take effect when approved by order of the office.
• It also submits an agent's manual of administrative procedures, prepared with the department and approved by order of the department.
• All licensed surplus lines agents must comply with the plan of operation and the agent's manual.
• If the association fails to submit a suitable plan within 180 days of the original act, or fails to submit needed amendments, the office adopts one by order after notice and hearing.

Immunity and Confidentiality

• Immunity (s. 626.921(7)). No liability arises against members, association staff, the board, the commission, the office, or the department for actions taken in performing their duties. The immunity does not cover breach of an insurance contract or agreement, or willful torts.
• Confidentiality (s. 626.921(8)). Information furnished to the FSLSO under the Surplus Lines Law, information furnished to DFS under s. 626.923, and records examined under s. 626.930 are confidential and exempt from public records law if disclosure would reveal information specific to a particular policy or policyholder. The FSLSO may share the information with DFS, and the exemption does not apply in proceedings brought against an agent or insurer.

Multistate Tax Agreements: s. 626.9362

DFS and OIR may enter cooperative reciprocal agreements with other states to collect and allocate nonadmitted insurance taxes on multistate risks under the NRRA. Such an agreement may include a clearinghouse whose service fee may not exceed 0.3% of gross premium processed, and the FSLSO must implement any agreement Florida enters. The Legislature may direct the CFO and the office to withdraw if an agreement is not in the state's best interest.

Practical Services

The FSLSO runs the SLIP+ electronic filing system, publishes the eligible-insurer search and tax and fee tables, performs compliance reviews, and produces the official Florida Surplus Lines Insurance Study Manual under contract with DFS. It also asks agents to update address and contact changes in SLIP+ within 30 days. That request is separate from the statutory 30-day notice to DFS under s. 626.551.