7.4 EMPA Surcharge, Citizens & FHCF Assessments, and Fiduciary Funds
Key Takeaways
The EMPA surcharge is $2 per homeowners-type policy and $4 per commercial fire, multiple peril, or business owner's property policy (s. 252.372).
Surplus lines agents remit the EMPA surcharge to the FSLSO with the tax, and tax penalties apply to late surcharges (s. 252.372).
Surplus lines agents must collect any Citizens emergency assessment with the tax, and failing to remit it violates s. 626.936 (s. 627.351(6)).
FHCF emergency assessments apply to surplus lines premium but are not premium and are not subject to the surplus lines tax (s. 215.555(6)(b)).
Premiums received by a surplus lines agent are trust funds held in a fiduciary capacity under s. 626.561, applied by s. 626.934.
Outline item II.C lists three statutes outside Chapter 626: s. 252.372, the Emergency Management, Preparedness, and Assistance (EMPA) surcharge; s. 627.351, Citizens Property Insurance Corporation assessments; and s. 215.555, Florida Hurricane Catastrophe Fund (FHCF) emergency assessments. It also lists s. 626.934, which applies the Code's funds-handling rules to surplus lines agents. Item C.4 names the EMPA surcharge specifically.
EMPA Surcharge: s. 252.372
To fund emergency management, preparedness, and assistance, Florida imposes an annual surcharge:
| Policy type | Surcharge per policy |
|---|---|
| Homeowners, mobile homeowners, tenant homeowners, and condominium unit owners | $2 |
| Commercial fire, commercial multiple peril, and business owner's property | $4 |
Rules to know:
- The policyholder pays the surcharge.
- The surcharge is not premium, but nonpayment may be a valid reason to cancel the policy.
- For surplus lines policies, the surcharge is remitted to the FSLSO at the same time as the surplus lines tax, and all penalties for failing to remit the tax and service fee apply to it.
- The FSLSO deposits EMPA collections into the Emergency Management, Preparedness, and Assistance Trust Fund at least monthly.
- Per the FSLSO, state and governmental entities are not exempt from the EMPA surcharge, even though they are exempt from the tax and service fee.
- The FSLSO applies it to specific coverage codes, including commercial property, builders risk, apartments, commercial package, commercial condominium, collateral protection, all homeowners forms (HO-1 to HO-8), dwelling property, farmowners, and mobile homeowners.
Citizens Property Insurance Corporation Assessments: s. 627.351(6)
Citizens is Florida's residual property insurer. If Citizens has a deficit:
- It first levies a Citizens policyholder surcharge of up to 15% on its own policyholders.
- Remaining deficits are recovered through emergency assessments on assessable insurers and assessable insureds. Surplus lines policyholders are assessable insureds.
For surplus lines:
- Emergency assessments on assessable insureds are collected by the surplus lines agent at the time the agent collects the surplus lines tax and paid to the FSLSO when the tax is paid.
- Collection begins on a date set by the office that is at least 90 days after the levy.
- Annual emergency assessments may not exceed the greater of 10% of the amount needed to cover the deficit plus financing costs, or 10% of aggregate statewide direct written premium for subject lines.
- Emergency assessments are not premium and are not subject to premium tax, fees, or commissions, but an insured's failure to pay one is treated as failure to pay premium.
- Failure to collect and remit a regular or emergency assessment is a violation of s. 626.936, with its per-day fines.
- The FSLSO annually reports aggregate surplus lines premium in subject lines to Citizens, and verifies that agents apply assessment percentages correctly.
Current status (FSLSO table): the Citizens assessment is 0% for policies effective on or after July 1, 2015. Transactions submitted on or after April 1, 2020 are neither assessed nor refunded. Past rates were a 6.84% regular assessment in 2006, a 1.4% emergency assessment from December 15, 2008 to June 30, 2011, and a 1.0% emergency assessment from July 1, 2011 to June 30, 2015.
FHCF Emergency Assessments: s. 215.555(6)(b)
If FHCF revenue cannot cover its obligations, OIR levies an emergency assessment on direct premiums for all property and casualty lines, including surplus lines, but excluding workers' compensation and medical malpractice. Marine and aviation coverages are assessable.
- Limits: no more than 6% of premium for losses from any one contract year, and 10% in the aggregate in a year.
- The surplus lines agent collects the assessment when collecting the tax and remits it to the FSLSO with the tax. An IPC insured remits it with the IPC tax.
- Emergency assessments are not premium and are not subject to the premium tax, the surplus lines tax, fees, or commissions.
- When unearned premium is returned, the FSLSO credits or refunds the assessment attributable to it.
Current status (FSLSO table): 0% for policies effective on or after January 1, 2015. Past rates were 1.0% for 2007 to 2010 and 1.3% for 2011 to 2014.
Funds Handling: s. 626.934
Section 626.934 makes three general agent-funds statutes apply to surplus lines agents.
| Section | Rule |
|---|---|
| s. 626.561 | Premiums, return premiums, and other funds received are trust funds held in a fiduciary capacity and must be paid in the regular course to the insurer, insured, or other person entitled. The separate-account rule for funds of insurers the agent does not represent expressly excludes surplus lines insurers. Diverting or misappropriating funds is a crime graded by amount |
| s. 626.581 | An insurer may not make an agent's commission contingent on savings in adjusting losses where the agent pays claims from a percentage of retained premium |
| s. 626.591 | A violation of s. 626.581 may lead to suspension or revocation for at least 6 months |
Misappropriation grading under s. 626.561(3):
| Amount diverted | Offense |
|---|---|
| $300 or less | First-degree misdemeanor |
| More than $300 and less than $20,000 | Third-degree felony |
| $20,000 or more and less than $100,000 | Second-degree felony |
| $100,000 or more | First-degree felony |
Worked Example: Full Homeowners Invoice
A surplus lines HO-3 policy is effective October 1, 2026, with a $9,000 insurer premium and a $150 surplus lines agent fee.
- Taxable premium: $9,150
- Tax at 4.94%: $452.01
- Service fee at 0.03%: $2.75 ($2.745, rounded)
- EMPA surcharge for a homeowners policy: $2.00
- Citizens and FHCF assessments: $0, both currently 0%
Total = $9,150 + $452.01 + $2.75 + $2.00 = $9,606.76. The tax, fee, and surcharge are remitted through the FSLSO by the 45th day after the quarter. October falls in the fourth quarter, so the due date is February 14, 2027.
What EMPA surcharge applies to a surplus lines business owner's property policy, and how is it remitted?
$4 per policy, remitted to the FSLSO at the same time as the surplus lines tax
$2 per policy, remitted directly to the Division of Emergency Management
1% of premium, remitted to the Department of Revenue annually
$4 per policy, included in taxable premium at 4.94%
If Citizens Property Insurance Corporation levies an emergency assessment, who collects it on a surplus lines policy?
Citizens bills the surplus lines insured directly each year
The eligible surplus lines insurer deducts it from claim payments
The surplus lines agent, at the time the agent collects the surplus lines tax
The Florida Insurance Guaranty Association
Under s. 626.561, applied to surplus lines agents by s. 626.934, how are premiums received by a surplus lines agent treated?
As the agent's income once the policy is bound
As trust funds held in a fiduciary capacity for the insurer, insured, or other person entitled
As FSLSO property until the quarterly affidavit is filed
As a loan from the insurer repayable within one year
Sections you finish are checked off in the contents.