The Florida Legislature passed House Bill 805, regarding insurance policy transfers. If, as anticipated, the governor signs the bill into law, it will allow insurance companies writing personal lines residential and commercial residential policies to transfer those policies to another insurance company upon the policy term's expiration.
Under current law, insurance companies writing commercial lines
insurance policies may transfer those policies to another insurance
company so long as they provide 45 days' written notice and
meet other requirements specified in the statute. A transferred
policy is considered a renewal policy, rather than a canceled,
non-renewed, or terminated policy. Companies may not use this
process, however, to transfer personal lines residential or
commercial residential policies. Rather, they must first cancel,
non-renew, or terminate the existing residential policy, as well as
provide a written notice of such cancellation 120 days in
advance.
The bill authorizes companies issuing residential policies to use a
transfer process similar to that currently authorized for
commercial lines policies. It allows the transfer of a personal
lines residential or commercial residential policy as a renewal
policy, rather than requiring the policy's cancellation. The
policy may only be transferred to another authorized insurer that
is a member of the same group or owned by the same holding company
as the transferring insurer.
The various conditions imposed by House Bill 805 to exercise the
transfer include that: the receiving insurance company be admitted
in Florida and writing residential property insurance in multiple
states, the receiving company may not convert the policy to a
surplus lines policy, and the receiving company must be determined
to have the same or better financial strength than the transferring
insurer. The transfer must result in policy coverage that is
substantially similar. The receiving company must provide notice of
the transfer to the policyholder at least 60 days before its
effective date and the Office of Insurance Regulation must approve
the transfer.
The Carlton Fields Insurance and Government Law and Consulting
Practice Groups stand ready to assist insurance companies with any
questions they may have regarding this legislation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.