June 26, 2019

In This Issue

• Legislative Session Recap

• Compliance Review
• Layered Policies
• TIQ's Got You Ticked?
• Sincerest Thanks
• Welcome Aboard

Legislative Session Recap

House Bill 301 was signed into law by Governor DeSantis last week. There are several surplus lines insurance provisions that will now go into effect on July 1, 2019.

The first is the removal of the $35 cap for the policy fee charged by the surplus lines agent. A surplus lines agent may now charge a “reasonable” per-policy fee that will still have to be reported to the FSLSO when making policy filings and will remain taxable. This fee must also be itemized separately to the insured before purchase and enumerated in the policy.

Additionally, a retail agent may also charge a “reasonable” per-policy fee for surplus lines policies which must also be itemized separately to the insured before purchase. The new retail agent fee statute does not specifically include the fee in the taxable premium definition nor is it required to be enumerated on the policy.

Finally, the diligent effort requirement of one declination (instead of three) on residential structures with a replacement cost of $1 million will be lowered to $700,000.

Also going into effect on July 1 is the sunsetting of the personal flood exemption from the diligent effort. Currently, the law allows a surplus agent to export a personal lines residential flood policy without requiring a diligent effort. This exemption will expire on July 1, 2019. No extension was passed, thus all residential flood risks will be subject to Diligent Effort requirements on July 1, 2019. 

If you have any further questions on these law changes contact Agent & Insurer Services at 800.562.4496, option 1 or email agent.services@fslso.com.

Compliance Review Scores Are In

Scores remain high at 96% for the first quarter of 2019. Great job!

Categorical averages are:

Keep up the good work.

Remember, if you want to refresh your compliance skills consider our online course, SLICE.

Surplus Lines Information and Compliance Education (SLICE) is our newest online course about compliance with surplus lines rules, procedures, filings, etc.  

If you have any questions, feel free to call us at 800.562.4496 or send an email to outreach@fslso.com.

How to Read and Reply to a Compliance Review Exam Summary Report

All licensed and appointed surplus lines agents, whether resident or nonresident, are subject to a Compliance Review at least once every three years. The purpose of the Compliance Review is to ensure that surplus lines agents are in compliance with the statutory requirements relative to the sales of surplus lines insurance contracts, to measure the quality of service provided in the surplus lines market place, and to provide educational assistance to surplus lines agents when necessary.

Within 30 days of the review, the surplus lines agent will receive a Compliance Review Exam Summary Report from FSLSO via email. Pay close attention to the instructions in that email, as a corrective action response addressing non-compliance findings in the report may be required.

If you have questions about the Compliance Review Process, please contact Felicia Meredith at 800.562.4496 ext. 105.

Layered Policies with Multiple Insurers Participating 

When submitting a multi-layered policy, or a risk with multiple insurers participating, agents need to enter each layer under the insurer that wrote the particular layer of business. If the policy number is the same for each insurer, agents will use the same policy number for the entire risk and can submit the layers under one transaction, but will need to break out the appropriate amount of premium allocated to each insurer and not combine all premium under one insurer. 

If insurers have submitted different policy numbers for each layer of the policy, the agent will need to submit each policy separately using the appropriate policy number, paying close attention to filing the policy number exactly as it appears on the declarations page. 

Tax Status 2 (TS2) TIQ

If you receive a Tax Status 2 (TS2) transaction in question (TIQ) when filing a transaction in SLIP, it means FSLSO is required to verify the named insured is in fact a governmental entity. 

Tax Status 2 should only be used when insuring risks for the state government, counties, municipalities, or their agencies. Due to the tax exemption of this tax status, all new business and renewal transactions (initiating transactions) are questioned when submitted to allow an FSLSO staff member the opportunity to verify the exemption. Documentation may or may not be requested by an FSLSO staff member. Once the staff member is satisfied the insured is in fact exempt from the tax and service fee, the questioned transaction will be manually accepted by an FSLSO staff member.

We receive questions about 501(c)(3) organizations and their exemption from surplus lines tax. If you have an insured who is a 501(c)(3) organization, typically the organization would not be considered exempt from surplus lines tax. These types of organizations are exempt from sales tax, but in most situations are not exempt from surplus lines tax. 

To be exempt from surplus lines tax under Tax Status 2, entities need to show that they are a governmental entity. If their Consumer’s Certificate of Exemption (DR-14) form states state/government, county/municipality, municipal government, etc. under the exemption category then the organization would be considered exempt from surplus lines tax. 

Thank You for Helping Us Help You

We would like to sincerely thank those of you who participated in our annual customer survey. We know how busy you are and we're grateful you took time out of your day to help us understand how we are performing.

The results are now in and we are very pleased. Overall satisfaction with FSLSO customer service came in at 95%! 

Thank you again for participating.

Facilitating Compliance Through Innovative Solutions

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