5 Tips for Mastering Surplus Lines Compliance

5 Tips for Mastering Surplus Lines Compliance

Surplus lines filing, reporting and payment can be overwhelming and complex. It is a constantly changing landscape. With all 50 states, plus U.S. Territories, each having their own set of rules and regulations, it can easily become so confusing that the temptation is to give up! This can lead to late filings and payments, resulting in hefty fees and penalties, not to mention possible loss of a license. Therefore, it is critical to be organized and stay in good standing with each state so that your business can be profitable and grow.

Ok, so now I know WHY we need to be compliant, but HOW do I accomplish it?

There are multiple items to keep track of in every state – statutes, due dates, tax rates, forms, fees, state filing instructions, zero reports, amendments, licenses, state stamp wording – to name a few – and each state is unique. There are some things you can do to streamline the process and stay on top of it all.

5 Tips for Becoming a Surplus Lines Compliance Pro

1. Have an organized, dedicated team.

The key to becoming and staying compliant is to dedicate individual(s) in your organization who are responsible for compliance. The goal of the compliance team is to stay on top of all state requirements for filing and paying taxes and any changes that occur.

An internal organizational structure is critical, from the time a policy is bound, to the final reporting and tax payment to the state. The process often involves multiple parties, including brokers, accountants, account managers, and filers. Everyone should be aware of the process and their part in it.

Record keeping is essential. There are endless resources online to research surplus lines laws, as well as state websites. Once you have gathered accurate information, keep it in a secure place within your company resources. Internal individuals who are involved in the surplus lines filing process should have access to these resources, which should be kept up-to-date and audited regularly.

Keep track of key due dates in an easily accessible location as well. Our surplus lines automation software, InsCipher Connect™, has a built-in Dashboard calendar for precisely this purpose so there is never a missed report or payment!

2. Plan ahead.

Do not get caught in a last-minute rush. Many reports require signatures, documents, or forms to be attached. With a well thought out and organized system in place, your team can look ahead and start preparing reports or filings well ahead of the state due date.

Be ahead of the curve by having a regular auditing plan in place. A robust compliance team is proactively reaching out to states and researching critical items on a regular basis and anticipating upcoming changes to tax rates or filing procedures.

3. Keep up to date on changes in the surplus lines insurance industry.

A dedicated team of compliance professionals will spend time delving into statutes, reading surplus lines manuals, and researching all state requirements and procedures. A team that is passionate about this kind of research and interpreting statutes is critical. Stay on top of changes by watching legislative bills in progress and registering with Surplus Lines Associations and websites to receive email alerts and bulletins. Consider joining SILA (Securities and Insurance Licensing Association) to receive regulatory updates. At times, a legal opinion on statutory changes is necessary. Having In-house counsel or access to an outside legal team is an essential piece of an active compliance department.

4. Network – join groups/associations and attend conferences.

A great way to stay abreast of happenings in the industry is to get to know others in the surplus lines world. There are many professional organizations, conferences, and online groups that specialize and are passionate about surplus lines. Join, attend, influence and be influenced by any and all of these.

  • Annual and semi-annual industry conferences
  • Local chapter meetings for professional designations
  • Law group meetings
  • Continuing education groups
  • Volunteer events sponsored by industry associations
  • Surplus lines podcasts and webinars

5. Develop positive relationships with state regulators.

At times, it is necessary to reach out to state regulators for clarification, assistance or advice. Keep an updated resource list of contacts at each state’s Division of Insurance and Surplus Lines Association so you know who to contact and avoid being re-directed to multiple different individuals. Developing a positive relationship with state regulators before you need help or have questions will help facilitate the process if and when you do need advice or assistance.    

Now that I know WHY compliance is essential and HOW to become compliant, what comes next?

Give your team the tools they need to increase efficiency and eliminate the frustration of trying to stay on top of compliance and filing. Our surplus lines management software, InsCipher Connect™, was created by surplus lines experts who understand the unique challenges faced by most agencies and brokerages. No more cumbersome Excel spreadsheets or hours of manual research trying to navigate complex regulatory requirements. The software automatically reconciles and validates filings prior to submission, and provides up-to-date state form templates and state stamp wordings, ensuring up-to-date compliance in all 50 states, plus Guam and Puerto Rico. If you’re ready to truly master surplus lines compliance, InsCipher Connect™ is the tool you’ve been missing. 

InsCipher is an insurtech software solution revolutionizing inefficient insurance processes. Save your agency time and money by automating surplus lines compliance, filing, and reporting. Want to learn more? Request a free demo today!

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