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Personal lines in Florida's E&S marketplace.

When people think about surplus lines, oftentimes they think about commercial property insurance. In Florida, commercial property makes up about 50 percent of the business written through surplus lines. What many do not realize is that personal lines makes up almost 10 percent of the total premium reported to the Florida Surplus Lines Service Office (FSLSO).

In 2009, personal lines premium in Florida was approximately $250-275 million, down from over $300 million in 2008, according to the FSLSO. This was due in part to the current economic conditions, including the number of homes that have been foreclosed.

Surplus lines wholesalers and carriers are ready, willing and able to help with your personal lines needs. Many of the surplus lines carriers doing business in Florida have been around for many years and are A.M. Best rated A or better. There are also several large admitted carriers that utilize surplus lines wholesalers to distribute their products. These carriers have the financial strength to "weather" the next storm.


Caution needs to be used when placing personal lines in Florida. Every day articles are written about the financial strength of Citizens Property Insurance Corp. and the start-up carriers that were formed specifically to take business out of Citizens. While a few of these carriers are well capitalized, many were formed with the minimum required capital. Several of these carries have ceased writing business; several more have serious financial concerns. This is with over four years without a hurricane hitting the state.

Diversified Markets

Some of the more common coverages that are placed in the surplus lines market place include homeowners, dwelling fire, personal article floaters, umbrellas, watercraft & flood. These coverages can be written as a package or on a monoline basis as needed.

Homeowners is the largest coverage type placed in surplus lines in Florida. An HO3, HO4, or HO6 policy provides a package-type policy that will generally include coverage for property, loss of use, and liability. There can be various reasons an agent would have to come to a surplus lines wholesaler to place an insured. Some insureds have poor claims history (either frequency or severity driven). There are homes that are owned by entities other than individuals. High-profile individuals and/ or high-valued homes can sometimes have a difficult time finding coverage. Many homes in Florida are older and are not well protected from loss.

Dwelling fire is the second largest coverage placed in surplus lines. DP1, DP2, or DP3 forms provide coverage for different perils. The DP1 form only provides basic perils. DP3 provides very broad perils for the dwelling and less broad for the contents. These policies are generally used to cover more difficult properties such as vacant dwellings, rental properties, and dwellings under renovation. They could also be used to cover secondary homes where the primary carrier is not willing to cover the property exposure. Liability may be excluded from some policies, but it can be written separately.

Personal article floaters (PAFs) provide coverage for special items such as jewelry, fine arts, coins, and the like. These items are either not covered or have low limits on most homeowners' policies. PAFs are another large coverage market in surplus lines, often driven by the inability or lack of desire by Citizens and some other admitted carriers to provide this coverage when they write the homeowners. Sometimes poor claims experience, the size of the schedule, or a unique or unusual item will drive the business to surplus lines.

Umbrella or comprehensive personal liability policies can end up in surplus lines as well, even though it is not property driven. An umbrella policy can provide much higher limits than are generally included in a homeowners' policy. Poor loss history, high-profile individuals, young or old drivers, and poor driving history can cause the admitted market to decline the coverage. Some insureds have vacation or short-term rental properties or are having construction done on their homes. Sometimes the homeowner carrier rating is not sufficient to meet the umbrella carriers minimum requirements. When these things occur, surplus lines may be a solution.

Surplus lines can provide extra protection for coverages like watercraft, flood, or special events like weddings, parties or reunions. Some admitted carriers are only willing to write boats up to a certain length or horsepower, so it is important to have a strong relationship with your surplus lines wholesaler to help you place those risks. The National Flood Insurance Plan (NFIP) will only provide $250,000 in dwelling and $100,000 in contents coverage for the peril of flood. There are surplus lines carriers willing to provide additional limits. They may even be able to provide coverage when the NFIP declines.

Yes, We Can Help

Surplus lines wholesalers and carriers are flexible and can be very creative when placing coverage for these challenging situations. Carriers all have their own guidelines when underwriting difficult business. Many of these carriers will modify these guidelines if asked. If you don't ask, you don't get!

You do need to keep in mind that carriers may have their own policy forms, endorsements, and exclusions. You must be sure to read the policy language carefully so you can explain any differences to your insureds. Do not assume the insured will read the policy and understand what it is saying.

Customer service, expertise, and financial strength are all excellent reasons to build a relationship with a wholesaler in Florida. A surplus lines wholesaler can be your friend and lifeline when trying to place personal lines business.

Michael Franzese, CPCU, CIC, CRM, ASLI, CPA, is Vice President, Burns & Wilcox, Tampa. He may be reached at 813-558-9560 ext. 2206, or

Contributing to this article were Bobbie Winkelmann, Personal Lines Manager, and Sherrie Chambers, Personal Lines Underwriter, Burns & Wilcox, Tampa.
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Author:Franzese, Michael; Winkelmann, Bobbie; Chambers, Sherrie
Publication:Florida Underwriter
Date:Apr 1, 2010
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