outsourcing SL tax filings

What to Expect When Outsourcing Your SL Tax Filings

Are you considering outsourcing your SL tax filings? We walk you through what to expect.

It’s no secret that the surplus lines industry is challenging for many to interpret and traverse. With few states sharing the same reporting requirements, due dates, tax rates, etc., many agencies are left feeling like they are out of their depth when it comes to staying compliant. Outsourcing tax filings is a common solution that a growing number of agencies are turning to in order to solve their surplus lines tax filing woes. But what can be expected when the implementation process begins? How much information will need to be migrated to the new third-party vendor? What services can be counted upon once implementation is over? 

Getting Started: The Kick-off Call

Once the decision has been made to utilize InsCipher to outsource your non-admitted insurance policies, you will be contacted by your implementation project manager to schedule a “kick-off call.” In this initial call, you will be given a detailed overview of the implementation process, including a breakdown of what to expect during each of the three phases. 

Implementation: Phase One

The phase one portion consists of setting expectations and document collection. InsCipher will assist with pulling PDB reports for all applicable licensees affiliated with and including the agency. It is essential to have all licenses, including effective dates, so your vendor is aware of all reporting requirements associated with those licenses. For example, in Arizona, no reporting is required if the agency does not write any business in the state. But in Pennsylvania, if the agency has had a license active since January 2020, you would be required to have submitted monthly reports along with an annual report, even if no business were written. Collecting this information, along with all state website logins, is the most critical part of your phase one requirements, and we are here to help every step of the way!

Implementation: Phase Two

The phase two portion of implementation can be very intimidating, especially if the agency has not retained complete or accurate records of policy filings, reports, and payments to the states. In this phase, your implementation project manager will collect the data of all current year policies that have been filed and policies that still need to be filed with the states. Why is it important for InsCipher to collect policies that have already been filed? Many states require a breakdown of all business transacted throughout the year to be reported in a descriptive and detailed breakdown within the annual report. We collect this information to ensure that what your agency has produced vs. what the state shows is reconciled and complete. How is this information collected? InsCipher has created a batch import spreadsheet to simplify the process of migrating data over in one file transfer. Specific columns will guide you through adding the information needed for our state specialists to do their job accurately and efficiently. It will also enable us to ensure that the tax rates and fees reported to the state were compliant based on current regulations.

Once this information, along with license information, has been imported into our surplus lines management software, InsCipher Connect™, your project manager will audit all state reporting requirements based on that material to see if you have been compliant in your monthly, quarterly, semi-annual, and annual reporting. If there are states in which a report was required and not submitted, plans will be made to get you caught up before completing the implementation process. Auditing all state websites where your agency is licensed to ensure no overdue required payments or state tags will also set the stage for clean and compliant reporting. 

Implementation: Phase Three

The phase three portion of your implementation is the training call with your project manager. In this recorded call, we will walk you through how to utilize the InsCipher Connect™ software to its full potential for your agency’s needs. Submitting policies to your third-party vendor should not be difficult! In the phase three training call, you will be amazed at how simple we have made this process. 

What information and documents do I need to get started?

A common phrase during this training is: “If the state requires it, we will ask for it. If they don’t, we won’t make you submit it.” This means we are only going to collect the information the states require. For example, we will not make you take time to enter all Lloyd’s syndicates for every policy that you have a syndicate breakdown for. However, when entering a policy in California (and other required states), if you select Lloyd’s as the carrier, a box will automatically pop up for you to enter those syndicates along with coverage amounts as the state requires. This creates peace of mind for the many agents using our system that if the state requires it, we will ask for it. 

This mantra also comes into play during the documents section of policy submission. As we all know, each state has specific stipulations for documents required when business is written in their state. In true form, InsCipher will only require what the states demand to submit the policy. As part of non-admitted policy writing goes, diligent efforts are necessary for each state, but not necessarily when submitting the policy to the state. When entering the required documents into our portal, you will notice that sometimes the diligent effort document is required, while other times, it’s optional. Again, this is dependent on state requirements. Since you are required to do a diligent effort search for each surplus lines policy written, InsCipher will give you the option to house your documentation in our portal, so it’s all located in the same place. We know that these are some of the most difficult documents to keep track of, and if a state ever audits your agency, they will require proof of diligent search (among other information). This helpful option is there if it works for your agency but is not required if you choose to keep your documentation in-house. 

Once training has been completed and your information has been fully imported and migrated, our Filing Services™ team will begin to take over your filing, reporting, and payment needs to each state. Policies with incomplete or inaccurate information will be flagged and sent back to your agency for completion and clarification. 

Outsourcing SL tax filings is a simple decision to make, but considering the process to migrate over data required to transfer responsibility can be daunting. While the process is elaborate, that does not mean it needs to be confusing or frustrating. With InsCipher, your needs have been anticipated, and procedures have been put in place to create the smoothest, most efficient implementation possible. Reach out to our sales team today to get a free demo of just how much we can help simplify your agency’s surplus lines enterprise!

InsCipher is an insurtech company providing software and services that are 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!

Andi - Implementation Project Manager at InsCipher

Andi is one of our implementation gurus at InsCipher. She has unique insight into both surplus lines filing services and state reporting, having previously worked in both capacities at InsCipher prior to accepting the position as Implementation Project Manager. Andi enjoys working with clients and building relationships that continue long after the implementation process has completed.

https://www.inscipher.com

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