Senate Bill sb2588c1

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    Florida Senate - 2004                           CS for SB 2588

    By the Committee on Banking and Insurance; and Senator Diaz de
    la Portilla




    311-2312-04

  1                      A bill to be entitled

  2         An act relating to insurance; amending s.

  3         624.425, F.S.; deleting a resident agent

  4         requirement for certain property, casualty, and

  5         surety insurers; amending s. 624.426, F.S.;

  6         conforming provisions; amending s. 624.428,

  7         F.S.; providing that a life insurer must

  8         deliver policies through a resident or

  9         nonresident agent; amending s. 626.025, F.S.;

10         requiring surplus lines agents to comply with

11         consumer protection laws; deleting provisions

12         prohibiting certain actions by nonresident

13         agents, to conform; amending s. 626.741, F.S.;

14         deleting a prohibition against nonresident

15         general lines agents having offices in this

16         state; conforming provisions; amending s.

17         626.752, F.S.; conforming provisions; amending

18         s. 626.753, F.S.; conforming provisions;

19         repealing s. 626.792(3), F.S.; deleting a

20         prohibition against nonresident life insurance

21         agents having offices in this state; repealing

22         s. 626.835(3), F.S.; deleting a prohibition

23         against nonresident health insurance agents

24         having offices in this state; creating s.

25         626.9272, F.S.; providing requirements for the

26         licensure of nonresident surplus lines agents;

27         amending s. 626.929, F.S.; conforming

28         provisions; amending s. 626.933, F.S.; allowing

29         the department to authorize the Florida Surplus

30         Lines Service Office to file suit on its

31         behalf; amending s. 626.930, F.S.; conforming

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    Florida Senate - 2004                           CS for SB 2588
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 1         provisions; amending s. 626.935, F.S.;

 2         providing additional grounds for discipline of

 3         licensees; providing an effective date.

 4  

 5  Be It Enacted by the Legislature of the State of Florida:

 6  

 7         Section 1.  Section 624.425, Florida Statutes, is

 8  amended to read:

 9         624.425  Resident Agent and countersignature required,

10  property, casualty, surety insurance.--

11         (1)  Except as stated in s. 624.426, no authorized

12  property, casualty, or surety insurer shall assume direct

13  liability as to a subject of insurance resident, located, or

14  to be performed in this state unless the policy or contract of

15  insurance is issued by or through, and is countersigned by, an

16  a local producing agent who is a resident of this state,

17  regularly commissioned and licensed currently as an agent and

18  appointed as an agent for the insurer under this code. If two

19  or more authorized insurers issue a single policy of insurance

20  against legal liability for loss or damage to person or

21  property caused by the nuclear energy hazard, or a single

22  policy insuring against loss or damage to property by

23  radioactive contamination, whether or not also insuring

24  against one or more other perils proper to insure against in

25  this state, such policy if otherwise lawful may be

26  countersigned on behalf of all of the insurers by a licensed

27  and appointed resident agent of any insurer appearing thereon.

28  The producing Such agent shall receive on each policy or

29  contract the full and usual commission allowed and paid by the

30  insurer to its agents on business written or transacted by

31  them for the insurer.

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    Florida Senate - 2004                           CS for SB 2588
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 1         (2)  If any subject of insurance referred to in

 2  subsection (1) is insured under a policy, or contract, or

 3  certificate of renewal or continuation thereof, issued in

 4  another state and covering also property and risks outside

 5  this state, a certificate evidencing such insurance as to

 6  subjects located, resident, or to be performed in this state,

 7  shall be issued by or through and shall be countersigned by

 8  the insurer's commissioned and appointed local producing agent

 9  resident in this state in the same manner and subject to the

10  same conditions as is provided in subsection (1) as to

11  policies and contracts; except that the compensation to be

12  paid to the agent may relate only to the Florida portion of

13  the insurance risks represented by such policy or contract.

14         (3)  An agent shall not sign or countersign in blank

15  any policy to be issued outside her or his office, or

16  countersign in blank any countersignature endorsement

17  therefor, or certificate issued thereunder.  An agent may give

18  a written power of attorney to the issuing insurance company

19  to countersign such documents by imprinting her or his name,

20  or the name of the agency or other entity with which the agent

21  may be sharing commission pursuant to s. 626.753(1)(a) and

22  (2), thereon in lieu of manually countersigning such

23  documents; but an agent shall not give a power of attorney to

24  any other person to countersign any such document in her or

25  his name unless the person so authorized is directly employed

26  by the agent and by no other person, and is so employed in the

27  office of the agent.

28         (4)  This section shall not be deemed to prohibit

29  insurers from using salaried licensed and appointed agents for

30  the production and servicing of business in this state and the

31  issuance and countersignature by such agents of insurance

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    Florida Senate - 2004                           CS for SB 2588
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 1  policies or contracts, when required under subsection (1), and

 2  without payment of commission therefor.

 3         (5)  This section shall not be deemed to prohibit an

 4  insurer from authorizing an agent who is not regularly

 5  commissioned and appointed currently as an agent of the

 6  insurer from countersigning a policy or contract of insurance

 7  issued pursuant to the provisions of ss. 627.311 and 627.351.

 8  This section does not apply to reissuance of insurance

 9  policies or endorsements thereto which are part of a mass

10  reissuance of such policies or endorsements and do not involve

11  a change of premium or payment of agent's commissions.

12         Section 2.  Section 624.426, Florida Statutes, is

13  amended to read:

14         624.426  Exceptions to resident agent and

15  countersignature law.--Section 624.425 does not apply to:

16         (1)  Contracts of reinsurance.

17         (2)  Policies of insurance on the rolling stock of

18  railroad companies doing a general freight and passenger

19  business.

20         (3)  United States Customs surety bonds that are issued

21  by a corporate surety approved by the United States Department

22  of Treasury and that name the United States as the

23  beneficiary.

24         (4)  Policies of insurance issued by insurers whose

25  agents represent only one company or group of companies under

26  common ownership if a company within one group is transferring

27  policies to another company within the same group and the

28  agent of record remains the same.

29         (5)  Policies of insurance issued by insurers whose

30  agents represent, as to property, casualty, and surety

31  insurance, only one company or group of companies under common

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    Florida Senate - 2004                           CS for SB 2588
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 1  ownership and for which a Florida resident agent is the agent

 2  of record and the application has been lawfully submitted to

 3  the insurer.

 4         Section 3.  Section 624.428, Florida Statutes, is

 5  amended to read:

 6         624.428  Licensed agent law, life and health

 7  insurances.--

 8         (1)  No life insurer shall deliver or issue for

 9  delivery in this state any policy of life insurance, master

10  group life insurance contract, master credit life policy or

11  agreement, annuity contract, or contract or policy of health

12  insurance, unless the application for such policy or contract

13  is taken by, and the delivery of such policy or contract is

14  made through, a resident or nonresident an insurance agent of

15  the insurer duly licensed and appointed under the law of this

16  state, who shall receive the usual commission due to an agent

17  from such insurer.

18         (2)  Each such insurer shall maintain a licensed and

19  appointed resident or nonresident agent at all times for the

20  purpose of and through whom policies or contracts issued or

21  delivered in this state shall be serviced.

22         (3)  This section does not apply to policies of

23  insurance or annuity contracts on nonresidents which are

24  applied for outside, and delivered in, the state or to

25  reissuance of insurance policies or endorsements thereto which

26  are part of a mass reissuance of such policies or endorsements

27  and do not involve a change of premium or payment of agent's

28  commissions.

29         Section 4.  Subsections (8) and (9) of section 626.025,

30  Florida Statutes, are amended and present subsections (10)

31  

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    Florida Senate - 2004                           CS for SB 2588
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 1  through (16) of that section are redesignated as subsections

 2  (9) through (15), respectively, to read:

 3         626.025  Consumer protections.--To transact insurance,

 4  agents shall comply with consumer protection laws, including

 5  the following, as applicable:

 6         (8)  Requirements for licensure of resident and

 7  nonresident agents in s. 626.112, s. 626.321, s. 626.731, s.

 8  626.741, s. 626.785, s. 626.792, s. 626.831, or s. 626.835, or

 9  s. 626.927.

10         (9)  The prohibition against nonresident agents having

11  a place of business in the state, a pecuniary interest in an

12  insurance business in the state, or a financial interest in an

13  insurance agency in the state, under s. 626.741, s. 626.792,

14  or s. 626.835.

15         Section 5.  Section 626.741, Florida Statutes, is

16  amended to read:

17         626.741  Nonresident agents; licensing and

18  restrictions.--

19         (1)  The department may, upon written application and

20  the payment of the fees as specified in s. 624.501, issue a

21  license as:

22         (a)  A nonresident general lines agent to an individual

23  licensed in his or her home state as a resident agent for the

24  same line of authority as a Florida resident general lines

25  agent and otherwise qualified therefor under the laws of this

26  state, but who is not a resident of this state, if by the laws

27  of the individual's home state, residents of this state may be

28  licensed in a similar manner as a nonresident agent of his or

29  her home state.

30         (b)  A customer representative to an individual

31  otherwise qualified therefor, who is not a resident of this

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    Florida Senate - 2004                           CS for SB 2588
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 1  state, but is a resident of a state sharing a common boundary

 2  with this state.

 3         (2)  The department may enter into reciprocal

 4  agreements with the appropriate official of any other state

 5  waiving the written examination of any applicant resident in

 6  that other state if:

 7         (a)  In the applicant's home state, a resident of this

 8  state is privileged to procure a general lines agent's license

 9  upon compliance with the conditions specified in subsection

10  (1) and without discrimination as to fees or otherwise in

11  favor of the residents of the individual's home state.

12         (b)  The appropriate official of the individual's home

13  state certifies that the applicant holds a currently valid

14  license as a resident agent in his or her home state for the

15  same line of authority as a general lines agent in this state.

16         (c)  The applicant satisfies the examination

17  requirement under s. 626.221, or qualifies for an exemption

18  thereunder.

19         (3)  The department shall not, however, issue any

20  license and appointment to any nonresident who has an office

21  or place of business in this state, or who has any direct or

22  indirect pecuniary interest in any insurance agent or

23  insurance agency licensed as a resident of this state; nor to

24  any individual who does not, at the time of issuance and

25  throughout the existence of the Florida license, hold a

26  license as agent or broker issued by his or her home state;

27  nor to any individual who is employed by any insurer as a

28  service representative or who is a managing general agent in

29  any state, whether or not also licensed in another state as an

30  agent or broker.  The foregoing requirement to hold a similar

31  license in the applicant's home state does not apply to

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    Florida Senate - 2004                           CS for SB 2588
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 1  customer representatives unless the home state licenses

 2  residents of that state in a similar manner. The prohibition

 3  against having an office or place of business in this state

 4  does not apply to customer representatives who are required to

 5  conduct business solely within the confines of the office of a

 6  licensed and appointed Florida resident general lines agent in

 7  this state. The authority of such nonresident license is

 8  limited to the specific lines of authority granted in the

 9  license issued by the agent's home state and further limited

10  to the specific lines authorized under the nonresident license

11  issued by this state. The department shall have discretion to

12  refuse to issue any license or appointment to a nonresident

13  when it has reason to believe that the applicant by ruse or

14  subterfuge is attempting to avoid the intent and prohibitions

15  contained in this subsection or to believe that any of the

16  grounds exist as for suspension, denial, or revocation of

17  license as set forth in ss. 626.611 and 626.621.

18         (4)  Such a nonresident shall not directly or

19  indirectly solicit, negotiate, or effect insurance contracts

20  in this state unless accompanied by a countersigning agent,

21  resident in this state, on such risk.

22         (5)(a)  All insurance policies as defined in s.

23  627.402, written under the nonresident agent's license,

24  including those written or issued pursuant to the Surplus

25  Lines Law, part VIII, on risks or property located in this

26  state must be countersigned by a local agent resident of this

27  state; and it shall be the duty and responsibility of the

28  nonresident agent, and, if called upon to do so by the

29  countersigning agent, of the insurer likewise, to assure that

30  such resident local agent receives the same commission as

31  allowed by the home state of the nonresident agent, but in no

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    Florida Senate - 2004                           CS for SB 2588
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 1  event shall the resident local agent receive, accept, or

 2  retain less than 50 percent of the usual Florida local agent's

 3  commission or 50 percent of the nonresident agent's

 4  commission, whichever is less, on policies of insurance

 5  covering property as defined in s. 624.604 and insurance

 6  covering in whole or in part real property and tangible

 7  personal property, including property floater policies.  On

 8  all other policies of insurance, including insurance covering

 9  motor vehicles, plate glass, burglary, robbery, theft,

10  larceny, boiler and machinery, workers' compensation, fidelity

11  and surety, bodily injury liability, and property damage

12  liability, in no event shall he or she receive, accept, or

13  retain less than 25 percent of the usual Florida local agent's

14  commission or 25 percent of the nonresident agent's

15  commission, whichever is less.

16         (b)  The provisions of this subsection, with respect to

17  resident agent countersignature commission, shall not be

18  applicable to any contracts of insurance purchased by a person

19  whose premiums for insurance in the preceding year of such

20  purchase exceeded $250,000 in the aggregate.  Nothing herein

21  is intended to preclude the negotiation and payment of a

22  commission to the countersigning agent to compensate him or

23  her for services performed or to be performed.

24         (4)(6)  Any individual who holds a Florida nonresident

25  agent's license, upon becoming a resident of this state may,

26  for a period not to exceed 90 days, continue to transact

27  insurance in this state under the nonresident license and

28  appointment.  Such individual must make application for

29  resident licensure and must become licensed as a resident

30  agent within 90 days of becoming a resident of this state.

31  

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 1         (5)(7)  Upon becoming a resident of this state, an

 2  individual who holds a Florida nonresident agent's license is

 3  no longer eligible for licensure as a nonresident agent if

 4  such individual fails to make application for a resident

 5  license and become licensed as a resident agent within 90

 6  days. His or her license and any appointments shall be

 7  canceled immediately.  He or she may apply for a resident

 8  license pursuant to s. 626.731.

 9         (6)(8)  Except as provided in this section and ss.

10  626.742 and 626.743, nonresident agents shall be subject to

11  the same requirements as apply to agents resident in this

12  state. However, nonresident agents are not required to

13  maintain an insurance agency in this state. If a nonresident

14  agent does maintain or have a financial interest in an

15  insurance agency in this state, the agency is subject to the

16  same requirements that apply to agencies of resident agents in

17  this state.

18         (7)(9)  If available, the department shall verify the

19  nonresident applicant's licensing status through the Producer

20  Database maintained by the National Association of Insurance

21  Commissioners, its affiliates, or subsidiaries.

22         Section 6.  Paragraph (a) of subsection (3) of section

23  626.752, Florida Statutes, is amended to read:

24         626.752  Exchange of business.--

25         (3)(a)  An insurer may furnish to resident Florida

26  general lines agents who are not appointed by the insurer its

27  forms, coverage documents, binders, applications, and other

28  incidental supplies only for the purposes set forth in this

29  section and only to the extent necessary to facilitate the

30  writing of exchange of business pursuant to this section.  The

31  insurer shall assign a unique brokering agent's register

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    Florida Senate - 2004                           CS for SB 2588
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 1  number to each agent not appointed with the insurer but

 2  furnished with the insurer's forms, coverage documents,

 3  binders, applications, and other incidental supplies.

 4         Section 7.  Subsections (1) and (3) of section 626.753,

 5  Florida Statutes, are amended to read:

 6         626.753  Sharing commissions; penalty.--

 7         (1)(a)  An agent may divide or share in commissions

 8  only with other agents appointed and licensed to write the

 9  same kind or kinds of insurance.

10         (b)  A resident agent and a nonresident agent, subject

11  to the provisions of s. 626.741, may divide among themselves

12  commissions as to kinds of insurance for which both are

13  appointed and licensed.

14         (b)(c)  This section shall not be construed to prevent

15  the payment or receipt of renewal commissions or other

16  deferred commissions or pensions to or by any person solely

17  because such person has ceased to hold a license to act as an

18  insurance agent, and shall not prevent the payment of renewal

19  commissions or other deferred commissions to any incorporated

20  insurance agency solely because any of its stockholders has

21  ceased to hold a license to act as an insurance agent.

22         (3)  A resident general lines agent may share

23  commissions derived from the sale of crop hail or

24  multiple-peril crop insurance with a production credit

25  association organized under 12 U.S.C.A. ss. 2071-2077 or a

26  federal land bank association organized under U.S.C.A. ss.

27  2091-2098 if the association has specifically approved the

28  insurance activity by its employees. The amount of commission

29  to be shared shall be determined by the general lines agent

30  and the company paying the commission.

31  

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 1         Section 8.  Subsection (3) of section 626.792, Florida

 2  Statutes, is repealed.

 3         Section 9.  Subsection (3) of section 626.835, Florida

 4  Statutes, is repealed.

 5         Section 10.  Section 626.9272, Florida Statutes, is

 6  created to read:

 7         626.9272  Licensing of nonresident surplus lines

 8  agents.--

 9         (1)  The department may, upon written application and

10  the payment of the fees specified in s. 624.501, issue a

11  nonresident surplus lines agent license to a nonresident

12  individual licensed in his or her home state as a resident

13  general lines and a resident surplus lines agent and otherwise

14  qualified under the laws of this state if, under the laws of

15  the individual's home state, residents of this state may be

16  licensed in a similar manner as a nonresident surplus lines

17  agent in that state.

18         (2)  The department may not issue a license unless the

19  applicant satisfies the same licensing requirements under s.

20  626.927 as required of a resident surplus lines agent. The

21  department may refuse to issue such license or appointment

22  when it has reason to believe that any of the grounds exist

23  for denial, suspension, or revocation of a license as set

24  forth in ss. 626.611 and 626.621.

25         (3)  The authority of a nonresident license is limited

26  to the specific lines of authority granted in the license

27  issued by the agent's home state and the lines authorized

28  under the nonresident license by this state.

29         (4)  Any individual who holds a nonresident agent's

30  license, upon becoming a resident of this state may, for a

31  period not to exceed 90 days, operate under the nonresident

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 1  license and appointment, but must become licensed as a

 2  resident agent within that time to continue transacting

 3  business in this state after the 90-day period.

 4         (5)  Except as provided in this section, nonresident

 5  surplus lines agents are subject to the requirements that

 6  apply to resident surplus lines agents in this state,

 7  including ss. 626.913-626.937.

 8         (6)  If available, the department shall verify a

 9  nonresident applicant's licensing status through the producer

10  database maintained by the National Association of Insurance

11  Commissioners, its affiliates, or subsidiaries.

12         Section 11.  Subsection (1) of section 626.929, Florida

13  Statutes, is amended to read:

14         626.929  Origination, acceptance, placement of surplus

15  lines business.--

16         (1)  A resident general lines agent while licensed and

17  appointed as a surplus lines agent under this part may

18  originate surplus lines business and may accept surplus lines

19  business from any other originating Florida-licensed general

20  lines agent appointed and licensed as to the kinds of

21  insurance involved and may compensate such agent therefor.

22         Section 12.  Subsection (1) of section 626.930, Florida

23  Statutes, is amended to read:

24         626.930  Records of surplus lines agent.--

25         (1)  Each surplus lines agent shall keep in his or her

26  office in this state, or in the agent's state of residence for

27  a nonresident who does not have an office in this state, a

28  full and true record for a period of 5 years of each surplus

29  lines contract, including applications and all certificates,

30  cover notes, and other forms of confirmation of insurance

31  coverage and any substitutions thereof or endorsements thereto

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 1  relative to said contract procured by the agent and showing

 2  such of the following items as may be applicable:

 3         (a)  Amount of the insurance and perils insured

 4  against;

 5         (b)  Brief general description of property insured and

 6  where located;

 7         (c)  Gross premium charged;

 8         (d)  Return premium paid, if any;

 9         (e)  Rate of premium charged upon the several items of

10  property;

11         (f)  Effective date of the contract, and the terms

12  thereof;

13         (g)  Name and post office address of the insured;

14         (h)  Name and home-office address of the insurer;

15         (i)  Amount collected from the insured; and

16         (j)  Other information as may be required by the

17  department.

18         Section 13.  Section 626.933, Florida Statutes, is

19  amended to read:

20         626.933  Collection of tax and service fee.--If the tax

21  or service fee payable by a surplus lines agent under this

22  Surplus Lines Law is not so paid within the time prescribed,

23  the same shall be recoverable in a suit brought by the

24  department against the surplus lines agent and the surety or

25  sureties on the bond filed by the surplus lines agent under s.

26  626.928. The department may authorize the Florida Surplus

27  Lines Service Office to file suit on its behalf. All costs and

28  expenses incurred in a suit brought by the office which are

29  not recoverable from the agent or surety shall be borne by the

30  office.

31  

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 1         Section 14.  Subsection (1) of section 626.935, Florida

 2  Statutes, is amended to read:

 3         626.935  Suspension, revocation, or refusal of surplus

 4  lines agent's license.--

 5         (1)  The department shall deny an application for,

 6  suspend, revoke, or refuse to renew the appointment of a

 7  surplus lines agent and all other licenses and appointments

 8  held by the licensee under this code, upon any of the

 9  following grounds:

10         (a)  Removal of the licensee's office from the

11  licensee's state of residence.

12         (b)  Removal of the accounts and records of his or her

13  surplus lines business from this state or the licensee's state

14  of residence during the period when such accounts and records

15  are required to be maintained under s. 626.930.

16         (c)  Closure of the licensee's office for a period of

17  more than 30 consecutive days.

18         (d)  Failure to make and file his or her affidavit or

19  reports when due as required by s. 626.931.

20         (e)  Failure to pay the tax or service fee on surplus

21  lines premiums, as provided for in this Surplus Lines Law.

22         (f)  Failure to maintain the bond as required by s.

23  626.928.

24         (g)  Suspension, revocation, or refusal to renew or

25  continue the license or appointment as a general lines agent,

26  service representative, or managing general agent.

27         (h)  Lack of qualifications as for an original surplus

28  lines agent's license.

29         (i)  Violation of this Surplus Lines Law.

30  

31  

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 1         (j)  For any other applicable cause for which the

 2  license of a general lines agent could be suspended, revoked,

 3  or refused under s. 626.611 or s. 616.621.

 4         Section 15.  This act shall take effect July 1, 2004.

 5  

 6          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 7                         Senate Bill 2588

 8                                 

 9  Requires applicants for a nonresident surplus lines agent
    license to meet all of the requirements that apply to resident
10  surplus lines agents.

11  Allows the Department of Financial Services to authorize the
    Florida Surplus Lines Service Office to file suit on its
12  behalf against a surplus lines agent or the surety insurer
    that issued the surety bond to the agent, if the agent has not
13  timely paid the surplus lines tax or service fee to the
    Service Office.
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