Yes, we have an open API endpoint to make integrating with your AMS simple and straightforward. We are working with integration partners, such as, to provide out-of-the box solutions for the users of those systems.
If you are an agency looking for a better way to manage surplus lines tax payment and reporting, then yes, InsCipher Connect® is a great fit for you. Even experienced surplus lines filers will see greater accuracy and efficiency in their current surplus lines process.
To ensure a successful implementation of the InsCipher Connect® software, plan on about 4-6 weeks. During this time, our team will provide system training, help import historical filing data, and on possible system integrations.
InsCipher aims to take the burden of filing, tax payment, and reporting off your plate, so you can get to what you do best–growing your business. Our team will validate all submissions, flag errors, submit surplus lines filings and payments, and compile monthly and annual reports as required.
The surplus lines market is known as the Non-Admitted Market or as the Excess & Surplus Lines Market. Carriers in the Surplus Lines Market are not licensed with a state, and are heavily regulated, but not in the same way as a carrier that is licensed in a state. Carriers in the Surplus Lines Market are not required to file their rates or forms and do not have any guaranty fund protection as in the Admitted Market. The Surplus Lines Market writes business that is not available in the Admitted Market, risks that have no historical data, high loss ratios, or require coverages in excess of what the Admitted market will not provide.
A non-regulated carrier and is not required to submit their rates or forms to a state department of insurance for approval. These carriers are required to meet minimum financial requirements and guidelines per state statutes.
In the surplus lines market, since the regulated entity is the surplus lines broker, it is the surplus lines broker that holds state taxes and fees in a fiduciary capacity until such time the taxes are paid to a state, as opposed to the Admitted Market, where the admitted carrier pays the taxes and fees to a state.
Diligent effort refers to the process of verifying that a particular risk is not covered by traditional carriers. Before coverage can be obtained from the surplus lines market, the originating producer must obtain 3 to 5 declinations from licensed carriers in the Admitted Market.
The guaranteed fund exists as additional protection to the insured in the event that an insurance company cannot fulfill its obligations when a claim is made. Surplus lines insureds cannot make a claim to this fund, and The Guaranteed Fund disclosure makes this clear to the insured.
Broker Responsibility refers to those states that do not maintain a list of eligible surplus line carriers for that state. Instead, the broker is responsible for determining if the surplus line carrier meets that state’s financial criteria.
An insured who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained qualified insurance consultant. Generally, this means that the Exempt Commercial Insured is exempt from certain regulatory requirements. (Refer to the NRRA Definition and the Home State Definition).The NRRA established the federal definition for Exempt Commercial Purchaser: The term ‘‘exempt commercial purchaser’’ means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:
The person employs or retains a qualified risk manager to negotiate insurance coverage.
The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months.
The person meets at least 1 of the following criteria:
The person possesses a net worth in excess of $20,000,000,
The person generates annual revenues in excess of $50,000,000,
The person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1,000 employees in the aggregate.
The person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000,
The person is a municipality with a population in excess of 50,000 persons.
Surplus line taxes are calculated based on the policy premium plus fees charged by the carrier and surplus line brokerand the state tax rate, and there could be anywhere from one to three taxes charged by the state, i.e., surplus line tax, stamping fee tax, assessment tax, fire marshal tax, or municipality tax. Depending on the state, the carrier fees and the surplus line broker fees may or may not be subject to one or all three taxes.
Use our free Surplus Lines tax calculator to make calculating surplus lines taxes a breeze!
The NRRA established the federal definition for Home State and that no state other than the home state of an insured may require any premium tax payment for non-admitted insurance, and the placement of non-admitted insurance shall be subject to the statutory and regulatory requirements solely of the insured’s home state.
The Home State as defined by the NRRA is determined by the State in which an insured maintains itsprincipal place of business or, in the case of an individual, the individual’s principal residence. If 100 percent of the insured risk is locatedin a state that is not the insured’s principal place of business or residence, the stateto which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
Any person who sells, solicits, or negotiates an insurance contract must be licensed. Any person that binds coverage with a non-admitted carrier must be licensed. The licensed surplus line broker is the responsible party that ensures all aspects of the surplus line placement are compliant with specific state regulations. This individual or agency is also responsible for reporting the placement to the applicable state as required by that state’s statutes. The surplus line broker should be very aware of each state’s varied requirements with regard to the due diligence, affidavit filings and tax reporting.
An MGA is not authorized to sell insurance to an insured, but rather acts as the middleman between the company and the independent agent or agency. An MGA may be given binding authority by an insurer. A broker that has both underwriting and claims authority or reinsurance authority could meet the statutory definition of managing general agent, which triggers additional regulatory compliance obligations. A Wholesaler does not sell insurance to the insured, but rather to an independent agent or agency, but can also act as a retail agent.
An Export list is a list of coverages a state recognizes as coverage the admitted market will not write in that state. If coverage is listed on the state’s Export list, then a diligent search effort is not required for that state. Not every state has an Export list, and of the states that do, the coverages listed for export vary by state.
Insurance procured directly by an insured from a non-admitted carrier without the use of a surplus line broker. IPC coverage is usually obtained by a risk manager of a commercial insured, whereby the commercial insured purchases their own insurance through an in-house risk manager who transacts insurance directly with the surplus line carrier.
All states require reports of surplus lines business written in a certain time period. Many, but not all states require a report filed whether or not business was written during that period. If no business was transacted during a particular period, a zero report may be required, indicating no premium.
Depending on the state, taxes are paid monthly, quarterly, semi-annually, annually or any combination of 2 of the four reporting periods. Even if no business was written during a reporting period, a ‘zero’ business report may be required and due to the appropriate state insurance department.
An Agent is a person who sells, solicits or negotiates insurance on behalf of an insurer. An agent represents the insurer.
A Broker usually do not have binding authority under an agency contract and cannot obligate the insurer to provide coverage prior to the insurer’s consent. Broker represents the insured to find coverage.
Penalties for surplus lines non-compliance can vary from state to state, but the most common infractions include penalties and additional fees, which will accrue interest if unpaid. If issues are not addressed, more severe penalties such as loss of business licenses and potential litigation are possible.
Helping our clients simplify surplus line tax filing, one agency at a time.
Before we started using the InsCipher surplus lines management system, I was always worried that there was some surplus lines report or payment I was forgetting—not anymore. I sleep much better knowing InsCipher is tracking these things for me.
Laura DudleyUnderwriter, Veracity Insurance
InsCipher has been a critical partner in helping us navigate the historically paper-driven surplus lines tax filing process. InsCipher provides an intuitive, tech-enabled platform for agencies/MGAs who are primarily digital, and focused on back-end workflow improvements.
Vincent LeporeSpecialty Underwriter, Energetic Insurance
I am the VP of Operations for an agency in Dallas. We have a couple of programs where we are responsible for filing the taxes/fees and this makes our work much easier. This product takes the guesswork out of taxes and fees. Thank you for this amazing tool!
Shyla LankfordVP of Operations, Lipscomb Insurance Group
You have nothing to lose but inefficient processes.
InsCipher is a surplus lines technology company providing innovative products and services to automate surplus lines tax filing, reporting, and compliance requirements, significantly reducing costs and improving efficiency.