D-DAY for NRRA

July 21, 2011- The year has passed quickly and we’ve reached the deadline for the implementation of the Non-admitted Reinsurance Reform Act (NRRA), which included surplus lines reform, with the intent of streamlining the surplus lines tax filing process. At the moment, there are two plans for the states to consider if they wish to share revenues on multi-state surplus lines tax filings as the new federal law states that only the home-state of the insured may collect taxes on multi-state policies. Some states have changed their laws to tax 100% of the premium on multi-state policies and not participate in shared allocations at all.

Many would argue that this could financially undercut some of the smaller states and cause even more trouble when trying to accurately determine the “home state.” The reality is that, if the states do not come together and come up with a simplified and unified system for the filing of surplus lines taxes, it is the brokers who will go looking elsewhere for solutions; perhaps taking it back to the federal level and the newly created Federal Insurance Office (FIO). This sort of situation is why it is imperative for all the states to work together to come up with a workable solution to all the items in NRRA. In achieving such, every one wins. The brokers get a streamlined surplus lines tax filing process, carriers have standardization of eligibility requirements and the states retain their rights to regulate the surplus lines industry in the future.

The National Conference of Insurance Legislators (NCOIL) has endorsed SLIMPACT (Surplus Lines Insurance Multi-state Compliance Compact) and the NAIC has put forth NIMA (Non-admitted Insurance Multi-state Agreement) for states to consider when drafting new legislation to comply with the mandates in NRRA. The states do not have to join in or contract with any compact or agreement in order to comply with the new federal laws. With two systems and two different clearing houses to deal with, not to mention the winner-take-all home states, it’s no longer a question of failure as an option; failure is eminent.

Last week Insurance Licensing Services of America, Inc. (ILSA) attended the NCOIL Summer Meeting in Newport, Rhode Island where the inaugural commission meeting for SLIMPACT was held. SLIMPACT has nine member states already and only requires one more before the compact can be implemented and a clearinghouse formed. The NAIC’s compliance agreement, (NIMA) now has six member states and has already started the clearinghouse formation process. Again, this means the states now have four choices, adopt SLIMPACT, NIMA, collect 100% of the premium taxes, or collect only their portion of the tax. For the brokers the events that have unfolded mean a more complex surplus lines tax filing process making them the clear losers.

For over a decade ILSA has assisted thousands of brokers with an array of compliance services including surplus lines tax filing through the development of SLIC™ (Surplus Lines Industry Connection). A system that provides a basic web interface for users to upload, edit and submit insurance coverage packages. Coverage data can be uploaded and parsed from a spreadsheet template, and optionally viewed or edited via an intuitive web interface. State tax rates are built into the formulas allowing quick and easy allocation calculations on multi-state policies. For years brokers using ILSA’s system have been able to properly allocate taxes for multi-state placements. SLIC™ uses cloud technology to provide brokers with 24/7 accessibility. This places ILSA in the unique position of being able to offer practical information and expertise in the area of researching and building the clearinghouse for streamlined surplus lines tax filings and allocations.

ILSA, on behalf of its clients, will continue to follow the progress of the differing compacts and agreements as well as the states’ compliance efforts as we navigate the uncharted waters of the NRRA era. With this in mind, ILSA will be attending the Western States Surplus Lines Conference (WSSLC) in Lake Tahoe, July 24-27. For more information please feel free to contact Lisa Miklojachak at (254) 729-8002 lmiklojachak@ilsainc.com OR ILSA@ILSAINC.COM

Why You Must Follow Proper Withdrawal of Certificate Of Authority Procedures.

Obtaining a Certificate of Authority is like anything else you achieve as an insurance professional, once a new level has been reached, there is a varying degree of due diligence required to maintain that security. Allowing ILSA’s support for your licensure will help eliminate the chance of a descent in success.

Due to the current climate of the economy, there is no room for errors which can result in fines and/or time lost for selling. It’s important to know that maintaining Certificates of Authority is very similar to an insurance license as there are on going obligations to be met. When you’ve reached the decision to cease business in a state, there’s a varying protocol to follow. Neglecting to follow each state’s set protocols can result in a compliance meltdown if you’re not aware of those “continued” obligations.

As with most states, each Secretary of State Office levies their own set of regulations concerning the Certificate of Authority and the withdrawal process. Business entities can face a number of unfortunate conditions when they do not follow a state’s requirements to properly remove their name from state systems.

* Continued obligations to file Corporate and/or Annual Tax Returns
* The accumulation of delinquent reports could cause your entity to fall into bad standing with the Secretary of States Office where you hold the Certificate of Authority
* Officers, Owners or Partners can be held responsible for failing to handle there commitments appropriately.

If you are asking yourself the question, “How do I prevent these issues?” then you are one step closer to taking control and avoiding compliance pitfalls that will ultimately follow your business forever. When you’re ready to start making changes to the geographical landscape of your business presence, ILSA knows each trail and can provide you with the guidance needed to stay on track.

Stay Compliance Healthy With ILSA – Certificate of Authority

In this economic climate, states are now desperately searching for ways to replenish their coffers. Pre-plan and allow ILSA to register nationally on your behalf to avoid compliance issues.

-In 2008 & 2009 Virginia conducted an audit of every insurance business entity licensed in their state. If the entities were not registered by the deadline, they issued orders to revoke the licenses.

Basically, If you continue to conduct business in a state without being registered with the Secretary of State (SOS)  you could face a similar situation. Although the SOS does not issue administrative actions, there are hefty fines and late penalties.

-The Connecticut Secretary of State discovered an insurance agency that was licensed by the Department of Insurance (DOI), but held no Certificate of Authority (COA) with them, that company was faced with $12,000 in penalties and fines. The Connecticut SOS has no amnesty policy for this situation.

Although some Departments of Insurance may not require you to be registered for a Certificate of Authority from the Secretary of States before issuing an entity license, this does not mean that the SOS in that state does not require you to be registered  before conducting business. ILSA recommends that if you plan to or are currently doing business in a state, but aren’t registered with the SOS that you consider choosing us to do this for you.

Avoid possible legal costs, hefty penalties or fines; call ILSA for immediate compliance help now!

ILSA’s New iPhone App

Groesbeck, Texas–For the first time, insurance agents and brokers can access valuable licensing and compliance
information remotely with a new, one-of-a-kind iPhone app that shows real-time license status information.
Developed by the premier licensing and compliance organization Insurance Licensing Services of America,
Inc.(ILSA), the new app is an invaluable tool that saves time and money. Agents do not have to be members of
ILSA to use the app, which can be downloaded for a one-time fee of $5.99.
“This new app means that insurance pros will never have to write business without knowing their status,” said ILSA
CEO Arleen Taveras. “This proprietary iPhone app checks licenses against the National Producer Database. It gives
them one-touch access to the country’s premier licensing and compliance experts.”
ILSA, founded in 1997, handles insurance licensing and compliance in the entire U.S. as well as Puerto Rico and the
U.S. Virgin Islands. It processes resident and non-resident initial licensing and renewals for all lines of authority
including Adjuster, Third Party Administrator (TPA), Managing General Agent (MGA), Risk Purchase Group
(RPG) and Surplus Lines. ILSA is a leading provider of individual and corporate services in the insurance industry,
handling corporate qualifications and registration with the Secretary of State, annual returns, franchise tax returns,
renewals, continuing education tracking, carrier contracts, appointment requests, affiliations, name changes, address
changes, carrier licensing, viatical settlement reporting and surplus lines tax filings.
For more information, visit www.ilsainc.com.
Media Contact:
Jennifer Wezensky
JW Public Relations
jennifer@jwpublicrelations.com
269.274.4071

Take the Surplus Lines Tax Challenge:

How much do you really know about Surplus Lines Tax Filings?  If you are licensed for surplus lines in multiple states, whether you are currently writing business or not there are a few things you must know.  Take this short quiz to see where your knowledge level is concerning the tax filing and reporting compliance of surplus lines placements.

 

1.  Most states require three declining carriers as part of your due diligence, but one state requires five; which state is it?

 

2.  There are 34 states that require annual reports if business was written during the period.  Of those states, how many require reports even if no business was written?

 

3.  Name one state that requires non premium bearing endorsements to be filed.

 

4.  What is the statutory penalty imposed by the state of West Virginia for the late filing of a quarterly report?

 

5.  Approximately half of the 50 states allow courtesy filings; name five of the states that DO NOT allow courtesy filing.

 

6.  Name three states in which the tax filings MUST be placed on an individual’s license because there is no provision for filing on an agency license, or the state does not issue an agency license.

 

For answers contact Joyce King:   jking@ilsainc.com or (254) 729-6122

Insurance Licensing Services Of America, Inc.

Big business in a small town:

 Insurance Licensing Services of America, Inc., (ILSA) is located approximately 90 miles south of Dallas in Groesbeck, Texas.  ILSA has become the most innovative provider of insurance compliance solutions for both the Insurance and Financial Industries.  Started by  Ted and Arleen Taveras in January 1997, we’re 12 yrs and 11 months strong!  We handle resident and non-resident initial licensing and renewals for all lines of authority including: Adjuster, Third Party Administrator (TPA), Managing General Agent (MGA), Risk Purchase Group (RPG), and Surplus Lines.  We are the industry leader in Surplus Lines Tax Filings, Annual Reports and Corporate Returns and offer a myriad of other valuable compliance services such as address change notifications, affiliations and appointments.  For a brief overview of the goings on here at ILSA you can check out our website or for the see it – feel it version; follow the link to our brochure.

Website: http://www.ilsainc.com

Brochure : http://www.ilsainc.com/ILSA_Brochure_0609.pdf