NAPSLO in the news

As part of our ongoing initiative to message the value of surplus lines and the wholesale distribution system in the insurance marketplace, NAPSLO proactively assists trade publications with editorial stories on the industry and the Association.

These stories have recently been published and focus on both the value of wholesale distribution and the importance of business succession planning and how NAPSLO’s career awareness initiatives can help members with that growing need.

• Business Insurance, "High capacity drives continued soft market in excess and surplus lines" - March 16, 2014

• National Underwriter, "Future Shock: Recruiting the Insurance Industry’s Next Generation" - April 20, 2014

• Best's Review - "Agent/Broker Success" -  March 2014

You can find a full list of NAPSLO in the News stories on the NAPSLO website here. 

IMPORTANT COMPLIANCE UPDATE FOR MEMBERS: The Foreign Account Tax Compliance Act (FATCA) and its impact on surplus lines

On July 1, 2014, the Internal Revenue Service (IRS) regulations for the Foreign Account Tax Compliance Act (FATCA) will become effective. Parts of the regulations will impact the surplus lines industry. NAPSLO developed a Q&A Memo to assist NAPSLO members in better understanding potential new compliance obligations under the regulations. The Q&A Memo provides detailed information on FATCA, the impact to the surplus lines insurance industry and the new responsibilities for the U.S. broker.

FATCA was adopted by Congress in an effort to prevent tax evasion by U.S. citizens, U.S. residents and corporations through the use of offshore accounts and is directed at foreign financial institutions and financial intermediaries. FATCA does apply to U.S. source insurance premiums to the extent such premiums are classified as “withholdable payments” and therefore does have potential impact on the surplus lines industry.

The full memorandum on FATCA, as well as a summary overview of the key points regarding FATCA obligations, is available here.

NAPSLO strongly recommends that each NAPSLO member consider implementing FATCA compliance procedures. We believe this should be simple and not overly burdensome. While compliance can be very simple, the importance of compliance should not be underestimated; it is indeed critical that you comply with this new federal regulation. Your non-U.S. partners should be very willing to provide the necessary forms to demonstrate their FATCA status upon your request and hopefully will readily provide them. It would be prudent to simply add this new step into your general checklist of requirements when securing a policy with non-U.S. partners.

NAPSLO continues to monitor requests and discussions with the IRS to exempt the surplus lines/property & casualty industry from the FATCA compliance process. However, as noted in the Q&A Memo, at this time the IRS has declined to provide an exemption. In an effort to reduce the compliance burden on U.S. brokers, the Council of Insurance Agents and Brokers (CIAB) is considering hosting a clearinghouse or similar assistance for brokers to more readily access W-8BEN-E and W-8IMY forms shared by non-U.S. insurers and brokers. NAPSLO has arranged for NAPSLO members to have access to this solution, if developed. Also, as we mentioned above, the IRS may eventually provide access to the non-U.S. entities’ forms as well.

If you have any questions or need additional assistance related to FATCA, please contact Keri Kish at keri@napslo.org or 816.799.0855. 

Lloyd's Interface for Wholesale Market Noted as Advance by E&S Joint Working Group

The E&S Joint Working Group (ESJWG), formed by NAPSLO, AAMGA, ACORD, and ACT, recently demonstrated a new wholesale business interface for U.S. partners of Lloyd’s of London at the AAMGA Automation and Technology Conference in March in Orlando.

The interface, developed with the support of ESJWG and demonstrated at the conference by Risk Placement Services, Arthur J. Gallagher, BinderCloud and Lucitech, generates an ACORD XML file after the coverholder (general agent) issues the policy. The system includes built-in error checking of data before transmission to Lloyd's. The binder data is held in the bordereaux queue and generates the ACORD XML to provide an immediate billing status on all policies issued.

The interface provides gains in efficiency with validation completed at the time a transaction is processed and time is saved preparing month-end reports, while parties in the transaction get immediate access to data.

The Lloyd's subgroup of ESJWG worked on the project as part of seeking efficiencies and standards for managing general agents (MGAs) and wholesalers working with the London market. The subgroup’s next initiatives include increased data validation at time of binding; buildout of a user interface for error messages; and premium and claims reporting on a real time basis.

The complete news release and the separate progress report covering efforts by the Carrier and Retail Agent/General Agent subgroups are available to download. The ESJWG is an alliance of carriers, agents, and vendors working with NAPSLO and other industry groups to improve the electronic efficiencies for retail agents, general agents, wholesale brokers and carriers.