NAPSLO has notified the South Carolina Insurance Department that it objects to S.C. Bulletin 2006-11 because it imposes an unnecessary and significant burden on surplus lines brokers to file a listing of underwriting restrictions for each “surplus lines insurer represented” based upon geography and any changes to those underwriting restrictions as of Dec 31, 2006.
Bulletin 2006-11 states that "an insurer shall provide the director each year a listing of underwriting restrictions based upon geography and also provide notice of new changes to current underwriting restrictions.”
The state statute in question, Section 38-75-1240, does not mention surplus lines. NAPSLO also questions the legality of expanding the scope of a statute through a bulletin issued by the insurance department. NAPSLO believes that the South Carolina legislature intended the 38-75-1240 to apply to surplus lines, it could have specifically said as much, like it did in other situations.
Given the ambiguity surrounding the terms “underwriting restrictions” and “surplus lines company represented,” it is unclear how a surplus lines brokers or companies should respond to this bulletin. Those interested may refer to NAPSLO's letter to the department regarding the bulletin.
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