Florida Office of Insurance Regulation Says Safety-Net Surplus Lines Tax-Related Petition Misdirected; Declines to Rule
Jun 28, 2010
The Florida Office of Insurance Regulation (“OIR”) announced on June 24, 2010 that it has declined to rule on an Amended Petition for Declaratory Statement (“Amended Petition”) filed by Safety-Net Hospital Alternative Risk Pool, LLC (“Safety-Net”) on March 12, 2010, because it was misdirected to the incorrect agency.
In its denial of Safety-Net’s Amended Petition, the OIR stated that it does not have authority over section 395.106(3), F.S., which authorizes licensed Florida hospitals to form an alliance for the purpose of pooling and spreading the liabilities of alliance members relating to property exposure, implementation of self-insurance coverage for its members, or securing of property insurance for the benefit of its members, provided the alliance meets other requirements. In its Order, the OIR stated that section 395.106(3), F.S. and the rules interpreting that statute are under the purview of the Florida Agency for Health Care Administration.
In 2007, several hospitals formed Safety-Net for the purpose of securing property insurance coverage through a surplus lines insurer in accordance with this law.
Safety-Net originally filed a Petition for Declaratory Statement with the OIR on February 15, 2010, in which it sought to determine whether hospital alliances formed for the purpose of securing property insurance under applicable law are subject to the Florida Insurance Code, which requires the payment of taxes and service fees on surplus lines policies.
The Florida Surplus Lines Service Office had taken the position that Safety-Net is required to pay the surplus lines policy tax and service fee pursuant to sections 626.932 and 626.9325, F.S. when Safety-Net purchases surplus lines property insurance coverage through a surplus lines agent or broker.
While section 395.106(3), F.S. provides that “[a]n alliance that meets the requirements of this section is not subject to any provision of the insurance code,” section 624.01, F.S. sets forth that chapter 626, which includes the requirement for the payment of surplus lines taxes and fees, is part of the Florida Insurance Code.
In its petitions, Safety-Net asserted that it is not required to pay the surplus lines tax or service fee provided by chapter 626, F.S., because of the express language found in section 395.106, F.S. that exempts alliances such as Safety-Net from the Florida Insurance Code.
A copy of the OIR’s Final Order is attached for review.
Should you have any questions or comments, please contact Colodny Fass.
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