Insurance Claims And Issues

Surplus Lines Insurance Companies And Insurance Brokers.

     "This case hinges upon seemingly age-old questions surrounding the proper contours of the agency relationship between an insured and a purported insurance broker -- questions for which our prior precedent provides useful guidance."   Download Essex_Insurance_Co. v. Zota (Fla., Opinion Filed June 26, 2008 sc06-2031).pdf, at 1-2.  This case involved a Surplus Lines Insurance Company.  In it, the Florida Supreme Court examined various Statutes and concluded that they did not prevent the application of settled agency rules to the Surplus Lines Insurance Company and its Direct Surplus LInes Agent.  Depending on the proof, application of settled rules of agency in that case could result in binding the Insured-Policyholder to a contract, even though the Policy documents were delivered to a Policyholder's alleged Broker and not directly to the Policyholder.

     In a case of first impression and likely far-reaching precedential value, the Florida Supreme Court answered all questions in light of previous decisions "that this Court has previously applied in insurance-broker cases."  Id. at 6.  Florida Statutes regulating and restricting Surplus Lines Insurance Companies, such as Section  626.922, do not require a different vantage point, the Court wrote in answer to certified questions from the Federal Eleventh Circuit Court of Appeals. 

     In contrast, other Florida Statutes governing "delivery of policy" and "attorney's fees," Fla. Stat. §§ 627.421 and 627.428, respectively, apply to Surplus Lines Insurance Companies just as they apply to other Insurance Companies.  Id. at 13.  Neither Section 626.922 or Section 627.421 "has altered the common-law presumption that an insurance representative, serving as an independent insurance broker, acts on behalf of the insured for purposes of procuring insurance coverage."  Id. at 14.

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Shopping For Alternative Home and Property Insurance.

   Surplus Lines and Condominium Windstorm Self-Insurance Trusts are reported by Julie Patel, in "South Floridians Turn to Alternative Home Insurance" (South Florida Sun-Sentinel.com, Monday, March 10, 2008).  This report is a potentially useful survey of alternatives for Homeowner's and other forms of Property Insurance Coverage in Florida.  The same is true of this handy reference of critical questions to ask regarding Surplus Lines Insurance and regarding Self-Insurance Trusts:  "Do Your Homework on Insurance Carriers" (South Florida Sun-Sentinel.com, Monday, March 10, 2008).

   Similar alternatives can be explored in other places where you or those you represent may be interested.

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Commercial Catastrophe Claims Coverage Potentially Made More Widely Available

     Hartford Financial Services Group issued a press release on April 10, 2007 that it contracting with Berkshire Hathaway to offer "expanded" surplus lines insurance policies providing certain commercial property insurance coverage.  The types of property to be considered for this type of insurance coverage, according to the announcement, "may include" remotely located manufacturing plants, apartment buildings, and commercial properties in general which are located in areas of the U.S. which are hit hard by Catastrophes.  Here is how some of the announced features may work.

     First State of The Hartford will issue what it calls "quota share subscription, or 'combination' basis" surplus lines insurance policies together with several Berkshire Hathaway insurance companies.  The Hartford companies and the Berkshire Hathaway companies involved in each policy will assume a percentage of the responsibility to pay, but this announced responsibility will be separate and individual, not joint.  The Berkshire Hathaway insurance companies announced by The Hartford include:  National Fire & Marine, National Indemnity, and National Indemnity Company of the South.

     First State, the insurance company associated with The Hartford, will manage all claims under this arrangement.  It takes a bit of reading between the lines, but policies falling under this announced agreement are described as part of the primary surplus lines market.

     Here is a link to the press release:  The Hartford April 10, 2007 Press Release:  "The Hartford's First State Management Group and The Berkshire Hathaway Group Team Up in the Surplus Lines Insurance Market".

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