Florida Surety Regulations
Our research indicates that a person must be a registered, licensed insurance agent in Florida in order to sell surety bonds in Florida. Information on the types of surety bonds available in Florida, the processes for applying to be a licensed agent and/or to open a licensed agency in Florida, and the financial requirements to become a licensed agent and/or open a licensed agency in Florida are presented. Our report contains information found through Florida government sources and other locations, as cited.
Six Types of Surety Bonds Available in Florida
- Florida Statutes cover 6 categories of surety bonds as part of the Insurance Code section: Title XXXVII INSURANCE. Chapter 624: INSURANCE CODE: ADMINISTRATION AND GENERAL PROVISIONS.
- 624.606 “Surety insurance” defined.— (1) “Surety insurance” includes: (a) A contract bond, including a bid, payment, or maintenance bond, or a performance bond, which guarantees the execution of a contract other than a contract of indebtedness or other monetary obligation; (b) An indemnity bond for the benefit of a public body, railroad, or charitable organization or a lost security or utility payment bond; (c) Becoming surety on, or guaranteeing the performance of, any lawful contract where the bond is guaranteeing the execution of a contract other than a contract of indebtedness or other monetary obligation; (d) Becoming surety on, or guaranteeing the performance of, bonds and undertakings required or permitted in a judicial proceeding or otherwise allowed by law, including surety bonds accepted by states and municipal authorities in lieu of deposits as security for the performance of insurance contracts; (e) Fidelity insurance as defined in s. 624.6065 for the purposes of the Florida Insurance Code other than part XX of chapter 627; or (f)Residual value insurance as defined in s. 624.6081."
License Requirements for Surety Bonding in Florida
Licensed Agents and Agencies Requirement
- A person who wants to create a surety in Florida must be a licensed agent, according to Florida Statutes 626.112.
- FL Stats 626.112 "License and appointment required; agents, customer representatives, adjusters, insurance agencies, service representatives, managing general agents.—"
- "(1)(a) No person may be, act as, or advertise or hold himself or herself out to be an insurance agent, insurance adjuster, or customer representative unless he or she is currently licensed by the department and appointed by an appropriate appointing entity or person."
Application Process to Become a Licensed Agent or Agency
- There is a multi-step process involved in becoming a licensed agent to offer insurance (including surety) in the State of Florida, as presented below:
- FL Stats 626.171 "Application for license as an agent, customer representative, adjuster, service representative, or reinsurance intermediary.—
- "(1) The department may not issue a license as agent, customer representative, adjuster, service representative, or reinsurance intermediary to any person except upon written application filed with the department, meeting the qualifications for the license applied for as determined by the department, and payment in advance of all applicable fees."
- The application process includes a requirement that the applicant swear an oath and provide his/her fingerprints.
- FL Stats 626.172 "Application for insurance agency license.—(1) The department may issue a license as an insurance agency to any person only after such person files a written application with the department and qualifies for such license."
- Other requirements for an insurance agency license include providing the names of all officers and owners and their addresses, the physical business address of the agency, the fingerprints of the sole proprietor, owners, directors, and officers of the agency.
- The specific license needed for a surety is "The Florida 2-20 Property and Casualty Agent License, or General Lines Agent License." Either of these license types "allows an individual, after being appointed by the Insurance Company, to transact any of the following kinds of insurance: property, casualty, surety, health, marine, and miscellaneous lines" and to open an independent insurance agency.
- Fees are required. A list of fees is here.
- Another list of fees is here.
Requirements for Bail Bonding
- A person who wishes to become licensed for bail bonds must meet state requirements that are different/in addition to other surety bond requirements.
Financial Requirements for Surety
- If a person is a "new insurer", then there are financial requirements that must be met. The requirement for a new surety appears to be $2.5 million "surplus" plus 10 percent of the surety's total liabilities, as described below:
- FL Stat § 624.407 (2019) "Surplus required; new insurers.—(1) To receive authority to transact any one kind or combinations of kinds of insurance, as defined in part V [See 624.606 above] of this chapter, an insurer applying for its original certificate of authority in this state shall possess surplus as to policyholders at least the greater of: (a) For a property and casualty insurer, $5 million, or $2.5 million for any other insurer; (b) For life insurers, 4 percent of the insurer’s total liabilities; (c) For life and health insurers, 4 percent of the insurer’s total liabilities, plus 6 percent of the insurer’s liabilities relative to health insurance; (d) For all insurers other than life insurers and life and health insurers, 10 percent of the insurer’s total liabilities; (e) Notwithstanding paragraph (a) or paragraph (d), for a domestic insurer that transacts residential property insurance and is: 1. Not a wholly owned subsidiary of an insurer domiciled in any other state, $15 million. 2. A wholly owned subsidiary of an insurer domiciled in any other state, $50 million; (f) Notwithstanding paragraphs (a), (d), and (e), for a domestic insurer that only transacts limited sinkhole coverage insurance for personal lines residential property pursuant to s. 627.7151, $7.5 million; or (g) Notwithstanding paragraphs (a), (d), and (e), for an insurer that only transacts residential property insurance in the form of renter’s insurance, tenant’s coverage, cooperative unit owner insurance, or any combination thereof, $10 million. (2) Notwithstanding subsection (1), a new insurer may not be required to have surplus as to policyholders greater than $100 million. (3) The requirements of this section shall be based upon all the kinds of insurance actually transacted or to be transacted by the insurer in any and all areas in which it operates, whether or not only a portion of such kinds of insurance are transacted in this state. (4) As to surplus as to policyholders required for qualification to transact one or more kinds of insurance, domestic mutual insurers are governed by chapter 628, and domestic reciprocal insurers are governed by chapter 629. (5) For the purposes of this section, liabilities do not include liabilities required under s. 625.041(5). For purposes of computing minimum surplus as to policyholders pursuant to s. 625.305(1), liabilities include liabilities required under s. 625.041(5)."
- Another type of financial "surplus" requirement is listed at FL Stats 627.754 Sureties upon official bonds.—.