Florida Surplus Lines Services Office Announces Decrease in Service Fees

The Florida Surplus Lines Services Office (FSLSO) announced that its service fee will decrease from 0.2% to 0.175% effective April 1, 2014.  This fee applies to single-state Florida policies only. For additional information, including how to determine the appropriate date for the rate, view the FSLSO announcement here.  

California Department of Insurance Announces Increase in Licensing Fees

Effective March 17, 2014, licensing fees for all insurance producers, bail agents, adjusters and insurers operating in California will increase by 10%, the California Department of Insurance (CDI) announced on Monday.  The increases are non-line specific and do effect surplus lines. To read the announcement from the CDI and view the new fee schedule, click here.  

NAPSLO Notes Passing of Former Foundation Board Member

Horst Leonard Lechler, former Board member of the Derek Hughes/NAPSLO Educational Foundation and president of NAPSLO member firm Anderson & Murison of Pasadena, Calif., passed away on Nov. 29 while on vacation in Boulder, Colo., according to the Insurance Journal.

Lechler started his insurance career with Houston Insurance and then for 37 years worked for Anderson & Murison as partner and later president. He served on the Board of the Foundation from 2000 to 2009 and was also actively involved in other industry and charitable organizations, serving as past president or director for the California Surplus Line Association, the American Association of Managing General Agents, the San Gabriel Chapter of CPCU, and the Pasadena Kiwanis Club.

Lechler was born in Wuppertal, Germany, on November 12, 1939 and came to the U.S. when he was 19. He served in the U.S. Army and became a naturalized U.S. citizen in 1967. Lechler is survived by his wife Ginny, and daughters Kristine Supple, Kathleen Hopper, son Mark Lechler, stepdaughter Robin Hooge, and four grandchildren.

A celebration of Lechler’s life will be held on Jan. 11, 2014 at 10:30 a.m. at Our Savior Lutheran Church in Arcadia, Calif. A reception will follow at the Valley Hunt Club in Pasadena. In-lieu of flowers, donations can be made to The Huntington Hospital Ambulatory Care Unit 626.397.3241 or The Salvation Army 562.264.3679.

Federal Insurance Office Releases Report

Today, the Federal Insurance Office (FIO) of the U.S. Department of the Treasury released a report entitled “How to Modernize and Improve the System of Insurance Regulation in the United States”, which was completed pursuant to Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act. NAPSLO’s Legislative Committee will be carefully reviewing the report for any information or recommendations related to the regulation and taxation of surplus lines insurance, and we will be providing additional updates for all NAPSLO members as NAPSLO’s review is completed. From our quick review, Section IV provides a brief summary of the FIO’s review of the Nonadmitted and Reinsurance Reform Act of 2010; however, the report includes no specific recommendations outside of continued monitoring of state progress toward implementation of Subtitle B of Title V of the Dodd-Frank Act. 

NAPSLO members with questions should contact either Keri Kish, NAPSLO Director of Government Relations, or Brady Kelley, NAPSLO Executive Director, at 816.741.3910.     

Massachusetts to Allow Electronic Filing of Broker Affidavit with Division of Insurance in 2014

The Massachusetts Division of Insurance announced they will begin accepting the Form BR-7 Affidavits for Insured electronically effective January 1, 2014. The Division posted information on this change to the new “2013 Surplus Lines Brokers Filing and Instructions” page of their website. The Division does not intend to issue a Bulletin regarding the electronic filling.  Brokers will now be allowed to retain the original “wet signature” Form BR-7 in their files and deliver an electronic copy to the Division as outlined here.

For additional information or questions, contact the Surplus Lines Auditor at the Division of Insurance directly at 617.521.7415.

 

Pennsylvania Reduces Required Documentation to be Eligible Insurer, Allows Diligent Search Declaration/Affidavit to be Electronically Signed

The Pennsylvania Department of Insurance issued notice on October 26 that it has updated 31 PA. Code Ch. 124, their Surplus Insurance Lines regulation. In general, these changes are non-substantive and serve to update the regulation to reflect current practice and procedures as well as some editorial changes. Some changes reflect further implementation of the NRRA.

Of particular interest is the change to reduce required documentation for foreign insurers to demonstrate eligibility. The Pennsylvania Department will rely more on information available through the NAIC ISITE system. In addition to their Certificate of Authority, foreign insurers only need to submit their jurat page to the Department, rather than the entire financial statement and supporting documentation. The Department continues to be able to ask for additional information from the insurer if the Department cannot determine if the eligibility criteria has been established from the jurat page. The jurat page will also be sufficient for foreign insurers already on the Department’s eligibility list, unless the Department determines from the jurat that additional information is needed. Alien insurers should provide written request along with evidence demonstrating they are listed on the NAIC’s Quarterly Listing of Alien Insurers.

Additionally of note are changes related to diligent search efforts. The updated code clarifies how a writing producer should document the diligent search effort in the placement of a policy. At the beginning of the year, the PASLA issued a Bulletin stating the three required declinations do not need to be recorded on the required 1609-PR form. On July 23, 2013 the Pennsylvania Surplus Lines Association issued a Bulletin announcing that the required diligent search effort form 1609-PR now may be electronically signed.

The changes also codify the prior elimination of the bond requirement.

A final revision of note is the change in procedures for filing notice of placement of an exported coverage using form 1604-E in lieu of providing specific documentation.

It is important to note these changes do not go into effect for 30 days from the publication of the notice and the PASLA and Department request you continue under current requirements until then.

For current versions of the required forms, additional information and questions, contact or visit the PASLA or the Pennsylvania Insurance Department. 

Surplus Lines Association of Illinois issues bulletin on zero premium endorsements

The Surplus Line Association of Illinois issued General Bulletin #40 stating proposals, endorsements, and other documents which are incidental to the insurance but which do not affect the premium charged are exempted from filing and countersignature and brokers do not need to file zero premium endorsements. The elimination of this requirement is appreciated and will ease some regulatory burdens of the broker. However, it is important to note brokers continue to be required to file zero premium semi-annual tax statements in Illinois at this time. As previously outlined, NAPSLO strongly advocates for all states requiring zero premium reports to eliminate that requirement.

E&S Workflows and Standards On Agenda at ACORD Implementation Forum

The insurance industry’s E&S Joint Working Group (ESJWG) will present in-depth discussions of excess and surplus lines connectivity issues at the upcoming ACORD Implementation Forum on October 29, 2013 in Boston.

Aimed to assist carriers, retail agents, general agents and wholesalers in boosting their ability to connect, these two ESJWG panel discussions will include:

1) Carriers & Lloyd’s: This initial one-hour session beginning at 3:15 p.m. will focus on standards development, adoption and electronic interaction implementations between managing general agents and insurance carriers, including Lloyd's. ESJWG spearheaded an effort working with ACORD to deliver the first-ever excess and surplus lines (E&S) industry web services standard for general liability, and is now delivering an expanded standard that includes property rates and rating requests.

Recent developments from the ESJWG insurance carrier subgroup and Lloyd’s subgroup will be the focus of information presented by:

• Greg Ricker of Sombra Technologies, E&S carrier subgroup co-chair.

• Scott Good of Scottsdale Insurance Co., E&S carrier subgroup co-chair.

• Tammie Miller of Risk Placement Services Inc., Lloyd’s subgroup co-chair.

2) Retail Agents & General Agents: From 4:30 to 5:30 pm, this session will expand on the prior session and focus on process efficiency and electronic transaction opportunities between retail agents and the E&S managing general agent (MGA)/wholesaler community. Recent developments from the ESJWG retail agent/general agent subgroup will be the focus of information presented by Lisa Parry Becker of William B. Parry & Son Ltd.; and Tate Tooley of Bloss & Dillard Insurance Managers Inc. Both co-chair the ESJWG retail agent/general agent subgroup.

ESJWG co-chairs Mike Roy, of Risk Placement Services Inc., and Angelyn Treutel, of SouthGroup Insurance-Gulf Coast will participate in both panel discussions.

Registration link for those attending because of the E&S sessions is: https://secure.events-registration.com/aif2013/?source=ES13. 

“ACORD Implementation Forum is the venue where decision-makers meet to really push the industry forward on connectivity issues,” said Roy, who is CIO of Risk Placement Services Inc. “So for ESJWG to highlight excess and surplus lines connectivity issues in that environment shows we’ve made much progress. The ESJWG sessions at AIF will highlight accomplishments along with current activities and the input needed from agents, wholesalers and carriers. ESJWG invites any and all industry participants to attend the session at ACORD Implementation Forum, but also get involved on an ongoing basis and tap ESJWG.org for resources.”

“ESJWG has effectively developed standards and implementation strategies, while providing information and training for retail agents, general agents and carriers to better automate and streamline,” said Treutel, who is president of independent agency SouthGroup Insurance-Gulf Coast in Bay St. Louis, Mississippi. “We continue forward on two tracks—implementing what is already available and developing additional tools for the E&S business. All these efforts can hasten business processing while reducing pain points, keystrokes, and errors and omissions risks throughout the E&S community.”

ESJWG’s overall objectives of in the E&S marketplace are:

• Carrier standards: Focus on E&S electronic rating transactions between general agents and carriers, work toward standards adoption with ACORD, and drive implementation of standards with service providers, general agents and carriers.

• Retail agent/general agent (RA/GA) interface: Concentrate on data transmission streams to/from RA systems to/from GA systems with emphasis on automating the flow of data.

• Lloyds: Jointly develop global standards.

The E&S Joint Working Group (ESJWG) was formed in 2008 as an alliance of carriers, agents and vendors working with the American Association of Managing General Agents (AAMGA), ACORD, Agents Council for Technology (ACT) of the Independent Agents & Brokers of America, and the National Association of Professional Surplus Lines Offices (NAPSLO). 

ESJWG’s mission is to improve the efficiencies for retail agents, general agents, wholesale brokers and carriers by promoting use of ACORD standards, best-practice workflows and the electronic exchange of data among each of the business partners. The group comprises retail agent/general agent, carrier and Lloyd's subgroups. www.ESJWG.org

NARAB II Passes House

The U.S. House passed legislation on Tuesday for the National Association of Registered Agents and Brokers, more commonly known as NARAB II. The Senate previously introduced the same bill but has not yet voted. If NARAB II becomes a law it will streamline the licensing process for agents and brokers nationwide, eliminating burdensome multistate requirements while preserving important state regulatory authority and consumer protections.

 NARAB II will establish a national clearinghouse as a one-stop licensing system for agents and brokers operating outside of their home state. Agents and brokers will apply for membership of the Association, agreeing to strict standards and ethical requirements. NARAB II will be governed by a board of state insurance commissioners and industry representatives with a goal of applying licensing, continuing education and nonresident insurance producer standards on a multi-state basis while preserving the laws of individual states.

 “Our Association and its members have put significant effort into advancing this legislation, taking advantage of every opportunity to highlight its impact and importance to the industry,” said NAPSLO Executive Director Brady Kelley. “We applaud the House for passing legislation that will greatly increase the efficiency and compliance in the licensing process for NAPSLO members licensed in multiple states.”

 We will continue to provide the NAPSLO membership with updates as the legislation progresses in the Senate.

In Memory of Orville D. Jones, NAPSLO Past President

On Thursday, August 15 the NAPSLO family lost one of its past presidents, Orville D. Jones, who served as NAPSLO President from 1998 to 1999 and was on the NAPSLO Board of Directors from 1992 to 2000.

After serving in the industry for many years he currently worked for CRC Insurance Services, Inc., serving on the Senior Management Group, Board of Directors and as Assistant to the Co-Chairman & CEO.

Orville started his career in insurance in January 1961 as a salesman for Employers Insurance of Texas. He joined the surplus lines industry in 1977 and was named Chairman, President and CEO of Crump Insurance Services in October 1986. When he retired from Crump in October of 1999 he was Chairman and CEO.

Orville was elected President of NAPSLO in September of 1998 and prior to that served for a number of years on the Board of Directors and committees. He was on the original NAPSLO Education Committee which developed and presented their plan to the Board of Directors for the first NAPSLO E&S School, which took place in 1990 at the University of Vermont. He was also chairman of the NAPSLO Education Committee that developed the NAPSLO Advanced School and served as a faculty member in the NAIC/NAPSLO Surplus Lines School for Regulators.

In addition to serving on the NAPSLO Board, Orville served on the Board of Directors of the Surplus Lines Stamping Office of Texas and was Chairman in 1995. He received his BBA in Business Administration from Stephen F. Austin University and served as an officer in the United States Marine Corps prior to entering the insurance industry.

He is survived by his wife Joan, one son, two daughters, and five grandchildren. Funeral services are set for Monday at 2:00 p.m. at the Park Cities Baptist Church in Dallas and graveside services will be Tuesday in Tyler, Texas at Cathedral in the Pines Cemetery. Funeral arrangements are being handled by the Stewart Funeral Home in Tyler.

At the family’s request, donations in Orville's name can be made to the Marine Corps Scholarship Foundation; 909 N. Washington Street, Suite 400; Alexandria, VA 22314 or the Mary Crowley Cancer Research Center - Attn: Accounts Receivable; 1700 Pacific Avenue, Suite 1100; Dallas, TX 75201.

In the passing of Orville Jones, NAPSLO and the wholesale industry has lost a great leader, an innovator and a tireless worker; but most of all we have all lost a friend, mentor and wonderful human being. Orville helped lead three industry organizations to great success and he did it with grace, humor and compassion. Although he is gone, Orville's indomitable spirit and many accomplishments live on. He will be missed.

Surplus Lines Premium Growing According to Stamping Offices

 The Surplus Lines Stamping Office of Texas issued a report showing the 14 states with stamping offices saw growth in surplus lines premium during the first six months of 2013 relative to the same period in 2012. While the report indicates growth of 21.2% in total, it is heavily influenced by a large amount of prior years’ return premium transactions processed by New York in 2012. When excluding New York for this anomaly, the remaining stamping offices reported a 15.1% increase in 2013 premium compared to prior year. This report is now available by clicking here.  

 The report of calendar year 2012 to 2011 comparisons is also available illustrating a 0.9% increase in 2012 premium volume. When excluding New York and its 2012 return premium transaction anomaly, the remaining stamping offices reported an 11.8% increase in premium. To view the report of 2011 to 2012 data, click here.  

NAPSLO weighs in on NIMA

As the first year of the Surplus Lines Clearinghouse comes to a close, NAPSLO reasserts its opposition to tax sharing in an article published by PropertyCasualty360.com. Brady Kelley, NAPSLO Executive Director, was contacted to explain NAPSLO’s position on tax sharing for the piece posted yesterday. Kelley illustrates NAPSLO’s belief that the cost of tax sharing would far exceed the benefit to states because of the immaterial amount of tax under debate.

You can read the full story online here. 

Connecticut Drops Affidavit Requirement

Connecticut House Bill 6379 will eliminate a requirement that executive affidavits be submitted showing a diligent search of the admitted market. Under the bill’s provisions, licensees and insureds must now submit signed statements to the effect that coverage was not available in the admitted market after a diligent search and that the amount of coverage procured is limited to the portion not available within the admitted market.

 Effective October 1, 2013, these statements are to be filed quarterly, due the 15th of February, May, August and November. Additional information regarding the policy is required in the signed statements, including type of policy and location of any real property insured. NAPSLO members can access more information about the bill through the StateNet portal of the NAPSLO website using their member ID and password.

Nevada Bulletin Clarifies Changes to Nonadmitted Laws

Nevada recently issued Bulletin 13-004 to inform all surplus lines brokers, and insureds who independently procure nonadmitted insurance, of changes to nonadmitted insurance statutes and regulations instituted as a result in federal or state legislation.  Some changes of note in the bulletin are that due diligence searches are now only required if Nevada is the home state of the insured and the insurer is not listed on the Quarterly Listing of Alien Insurers maintained by the NAIC; documentation of a diligent search is now to be made electronically through SLIP rather than through an affidavit.  Additionally, diligent searches are no longer required when dealing with an exempt commercial purchaser. 

Provisions requiring each insurance contract to include the signature and license number of the procuring broker were repealed.  Surplus lines transaction records are no longer required to be maintained separately from other records in a place of business, but the requirement to maintain records stand.  Statutes including eligibility and application requirements for nonadmitted insurance were repealed, as they were preempted by the NRRA and other legislation.  Regulations were amended to clarify that Nevada would collect premium taxes on a 100% home state tax basis.

Finally, the Department included language to reiterate to brokers and insureds that the primary difference between surplus lines and independently procured nonadmitted insurance was the absence of the broker in the transaction, emphasizing that if a broker was involved in the procurement of the policy in any manner then the policy cannot be considered independently procured.

Texas House of Representatives Recognizes Former NAPSLO President Gene Eisenmann

The House of Representatives of the 83rd Texas Legislature paid tribute to the memory of former NAPSLO Past President Eugene Eisenmann, who passed away on May 19th, with a resolution recognizing his career.

The resolution (HR 3073), unanimously adopted by a rising vote of the House on May 27, 2013, notes that Mr. Eisenman was a preeminent figure in the excess and surplus lines industry, and that he rose from “humble beginnings to leadership of a prestigious insurance enterprise; highly respected by his peers, he was admired for a benevolent management style that achieved spectacular results.”

Louisiana bill aims to increase conformity to the NRRA

Louisiana House Bill 543, a bill to increase conformity between Louisiana state law and the provisions of the NRRA, is on Governor Bobby Jindal’s desk awaiting his signature.  If the governor does not veto the bill in ten days it will become law, though it is anticipated he will sign it into law with the next round of bills.  HB 543 eliminates the diligent search affidavit for personal lines insurance and eliminates the requirement to be on an approved list maintained by the Department of Insurance.  The Department will continue to maintain a voluntary “approved list” of carriers who submit to the Department’s requirements.  NAPSLO members can access the full text of the bill using the StateNet portal on the NAPSLO website.

Washington Eases Requirements for Surplus Lines Broker Licensing

In a recent ruling, Revised WAC 284-15-010, the Washington State Office of the Insurance Commissioner streamlined licensing requirements for surplus lines brokers in that state.    Surplus lines brokers will no longer be required to hold a concurrent Washington insurance producer license in order to receive a surplus lines broker license.  The Commissioner will now be able to license both resident and non-resident surplus lines brokers without the concurrent licensing requirement.  This will make Washington reciprocal with other states.

Convention Registration Now Open

Registration for the NAPSLO Annual Convention, set for Sept. 30 - Oct. 3 in San Diego, opened on Wednesday, May 29th, and members can register online using their NAPSLO Member ID.

Convention registration fees are $825 for delegates and $395 for spouses until September 1.  After September 1 fees will increase to $925 and $425. Representatives of member firms may register on-line for the convention or download registration forms from the convention site.

The convention will take place at the Manchester Grand Hyatt San Diego and the San Diego Marriott Marquis & Marina, with the Opening Reception at the Marriott and all other NAPSLO programs at the Hyatt. Hotel rooms will be available at both hotels, and also at the Embassy Suites San Diego Bay.

The convention opens on Monday, Sept. 30. However, to assist delegates with Monday morning meetings, NAPSLO will offer early packet pickup from 6:00 – 8:00 p.m. on Sunday, Sept. 29.
The featured program of the convention will be an address by noted actor, political commentator and economist Ben Stein, on Wednesday, October 2.  Mr. Stein was selected to give the E.G. Lassiter Lecture Series, presented by the Derek Hughes/NAPSLO Educational Foundation.

Other programs include a Happy Hour in the Brokers’ Lounge from 3:00-4:00 p.m. on Monday, followed by the Opening Reception from 5:30-7:30 p.m.

NAPSLO’s Next Generation will host a panel discussion on Tuesday from 3:00-4:00 p.m., followed by a cocktail reception from 4:00-5:30 p.m. The Next Generation is also hosting leadership workshops on Monday.

The traditional awards and recognition programs, and the Association's Annual Business Meeting, will take place on Wednesday morning.

In Memory of Eugene J. Eisenmann, NAPSLO Past President

Over the past weekend the NAPSLO family lost one of its past presidents, Eugene J. Eisenmann. Gene served as NAPSLO President from 1994 to 1995 and was on the NAPSLO Board from 1990 to 1996.

After serving in the industry for many years Gene had recently served as a consultant and Vice Chairman at tKg and advisor to AmWINS as well as other wholesalers.

 Previously he served as Chairman Emeritus of Colemont Insurance Brokers prior to its sale to AmWINS. In his early days in the industry he worked for Stewart Smith Southwest, Inc. before founding HEATH Insurance Brokers, Inc. where he served as President and later Chairman following the renaming of the firm to Colemont in 2004.

In addition to serving on the NAPSLO Board, Gene served as President of the Texas Surplus Lines Association and had been a Director and Chairman of the Surplus Lines Stamping Office of Texas.

 He is survived by his wife Denise, three sons, a daughter and many grandchildren. At Gene’s request, services will be limited to family. At the family’s request, donations in Gene’s name can be made to the Prostate Cancer Foundation at: www.pcf.org.

 Gene was a wonderful human being. To know Gene was to love him. A first class businessman who rose from a humble background to the pinnacle of our industry, he never forgot where he came from. Gene was that rare individual who could get results while never losing sight of the human side of our business.

Texas Legislation may affect Nonadmitted Captive Insurers

Texas Senate Bill 734, legislation designed to draw back to Texas some of the captive companies affiliated with domestic corporations in the state, may have some effects for nonadmitted captives operating there.  In addition to the potential for additional companies to form captives, the Texas Comptroller has published a draft regulation (34 TAC Sec.3.835) that would provide for an unauthorized insurance premium tax for nonadmitted captive insurers.  NAPSLO members can view the full text of SB 734 through the StateNet portal on the NAPSLO website.