When people first start doing business in the non-admitted market, the to-do list of compliance tasks can feel intimidating. There are lots of new requirements and procedures to master, and the stakes are high, for both your bottom line and your regulatory reputation! That\u2019s why we\u2019re sharing these five pro tips for surplus lines compliance\u2014and some real-world examples.<\/p>\r\n\r\n\r\n\r\n
It\u2019s much harder (and more expensive) to catch up on surplus lines filings and tax reports than to keep up with them. Give yourself and your surplus lines licensees some lead time before a deadline. Then, you can double-check that all policies and supporting documents are in order.<\/p>\r\n\r\n\r\n\r\n
If you do fall behind, speed is of the essence. Consider using a compliance service. They can help you get caught up and resolve any regulatory issues arising from late or missed filings.<\/p>\r\n\r\n\r\n\r\n
Penalties for late filings and reports can add up quickly. West Virginia, for example, assesses a fine of $25 per day. In Illinois, penalties can reach $2000 per occurrence. Neither of these states waives penalties.<\/p>\r\n\r\n\r\n\r\n
There are so many deadlines for surplus lines compliance: license renewals, policy information filings, premium tax reports, etc. A good calendar is a compliance coordinator\u2019s best friend! The tool you use isn\u2019t that important. Anything from a paper desk calendar to a sophisticated project management tool can do the trick.<\/p>\r\n\r\n\r\n\r\n
What\u2019s essential is putting in the time to keep the calendar up to date. It\u2019s also important to remember that some jurisdictions have \u201cquirky\u201d rules that can alter compliance due dates. Understanding these rules can prevent costly errors.<\/p>\r\n\r\n\r\n\r\n
In Texas, surplus lines premium taxes typically are due by March 1st, for the previous year. However, when accrued taxes due equal or exceed $70,000, the state requires a prepayment.\u00a0It is due on the 15th day of the month following the month in which accrued taxes total $70,000.<\/p>\r\n\r\n\r\n\r\n
Having a compliance coordinator can be invaluable for an E&S brokerage of any size. Nothing makes a coordinator\u2019s job more difficult though than having to chase down agents and brokers for information.<\/p>\r\n\r\n\r\n\r\n
Creating a culture of compliance requires making these tasks part of the daily routine\u2014not a mad scramble as a deadline approaches. Leadership must hold every team member accountable for their part in the process. Licensees need to understand that\u00a0they<\/strong>\u00a0are responsible for meeting filing and reporting deadlines. After all, penalties for non-compliance attach to their licenses and harm their regulatory reputations.<\/p>\r\n\r\n\r\n\r\n Many people don\u2019t understand that compliance requirements begin as soon as a surplus lines license issues\u2014even if they haven\u2019t bound a policy yet. More than half of U.S. jurisdictions require licensees to submit\u00a0zero reports\u00a0attesting that they have not written any business during a given period.<\/p>\r\n\r\n\r\n\r\n The diligent oversight required for such a dynamic market can lead licensees to see\u00a0regulators<\/a>\u00a0as the \u201cenemy.\u201d It isn\u2019t an adversarial relationship, though. Regulators\u00a0want<\/strong>\u00a0you to succeed and offer a wide range of resources to help.<\/p>\r\n\r\n\r\n\r\nBuild Relationships with Regulators<\/h2>\r\n\r\n\r\n\r\n