Dealing with the Ghosts of Resident Agent Countersignature Requirements

The NASBP office continues to receive calls periodically about resident agent countersignature requirements (stating that a policy or bond must be countersigned by a licensed resident agent). Often such requirements are placed in bidding documents by personnel in state or local governmental units who simply are following “the way they have been doing things” for years. They usually are not aware of the case law striking down the resident agent countersignature requirement or the amended statute that deleted such requirement. All states have eliminated resident agent countersignature requirements on the grounds that such requirements are unconstitutional and unfairly discriminate between licensed non-resident agents and licensed resident agents.

Unfortunately, resident agent countersignature requirements sometimes are placed in bidding documents by the retained architect or engineer for the public construction project, who may be operating under outdated information about the applicable statute. An education campaign then becomes necessary to demonstrate that the law has indeed changed and that it is not proper to require a resident agent countersignature on the contract surety bond. Even when presented with the proper information, the contracting officer or consulting engineer may be reticent to amend the bidding documents without first consulting with in-house or external counsel, eating up precious time. At the very least, such circumstances are frustrating and time-wasting. NASBP continues to address these situations as they are brought to our attention around the country.

Sometimes we receive calls in which the caller incorrectly believes that all countersignature requirements, not just those that unconstitutionally favor resident agents, are invalid. Some states, such as Nevada and Florida, do have current, valid statutes that require policy countersignatures. Florida, for example, requires policy countersignatures, with some exceptions, on most insurance policies, including bonds. Such policies may be countersigned by a licensed resident or nonresident agent appointed by the insurer. Florida used to have a statute that permitted only resident agent countersignatures, but that statute was amended in 2004 by the Florida Legislature upon it being legally challenged on constitutional grounds and found by the federal court to violate the Privileges and Immunities Clause and the Equal Protection Clause of the U.S. Constitution. The revised and current countersignature statute, F.S.A. § 624.425, does not distinguish between licensed resident agents and licensed nonresident agents.

Licensing & Surplus Lines Laws published annually by The National Underwriter Company (www.nationalunderwriter.com; 1-800-543-0874) is an invaluable resource that characterizes each state’s policy countersignature requirements, if any, and provides other important information about producer licensing and related subjects. I urge all producers to consider adding this informative reference work to their business library.