Florida Managing General Agent License Eliminated and Replaced with Appointment-Only Requirement

May 31, 2018 | By

Tallahassee 5/31/18 – During its 2018 session the Florida Legislature passed a bill (CS/CS/CS/HB 1073) that eliminates Florida’s managing general agent (MGA) license requirement and replaces it with an appointment-only requirement. The legislation was signed by the Governor on March 23, 2018 and becomes effective July 1, 2018. Consequently, on and after July 1, 2018, the Florida Department of Financial Services (DFS) will no longer accept new applications for MGA licensure. Based on communications with DFS, existing MGA licenses held by persons prior to July 1, 2018 will remain in force unless and until the license terminates through surrender, revocation or otherwise.

Under Florida law, a “managing general agent” is defined as any person (individual or entity) managing all or part of the insurance business of an insurer, including the management of a separate division, department, or underwriting office, and acting as an agent for that insurer, who, with or without authority, separately or together with affiliates, produces directly or indirectly, or underwrites an amount of gross direct written premium equal to or more than 5 percent of the policyholder surplus as reported in the last annual statement of the insurer in any single quarter or year and also does one or more of the following: (1) Adjusts or pays claims; (2) Negotiates reinsurance on behalf of the insurer. The definition of “managing general agent” excludes: an employee of an insurer; the US manager of a US branch of an alien insurer; an affiliated underwriting manager of an insurer that is not compensated based on volume of premiums written; a Florida-licensed third party administrator; and the attorney-in-fact of a reciprocal insurer.

Florida law presently requires an MGA to be licensed as such by the DFS and appointed as an MGA by one or more authorized insurers. In addition, a Florida-licensed general lines agent is not permitted to hold a Florida MGA license under the current law. The new legislation continues the MGA appointment requirement for individuals and entities who meet the definition of “managing general agent,” but the prohibition against general lines agents holding MGA licenses has been deleted.

Florida law requires insurance agencies to be licensed by the DFS, but such agencies are not required to be appointed by insurers in Florida. Under the new legislation, however, insurance agencies that meet the definition of “managing general agent” will require MGA appointments.

Based on communications with the DFS, its eAppoint system has been updated to allow insurance agencies and individual general lines, life, health and bail bond agents to be appointed as MGAs after July 1, 2018.

The legislation does not amend any of the substantive requirements applicable to MGAs, such as required terms for MGA contracts or the ability for MGAs to charge a per-policy fee not to exceed $25.

About the Author
Wes Strickland is a Shareholder at Colodny Fass and heads the firm’s Insurance Regulatory & Transactions Practice in Tallahassee, Florida. He can be reached at (850) 321-3475 or wstrickland@colodnyfass.com.