The Florida Surplus Lines Service Office ("FSLSO") Board of Governors ("Board") met July 27, 2011, during which it discussed the feasibility of providing Clearinghouse services for the Nonadmitted Insurance Multi-State Agreement ("NIMA"). Proposed updates to the FSLSO Accounting and Financial Policies and Procedures Manual, discussion of the FSLSO Plan of Operations, and review of various reports were also included among the agenda items.
Proposed NIMA Clearinghouse
Since May 2011, the FSLSO’s National Clearinghouse Committee ("Committee") has held regular meetings about the possibility of the FSLSO working with the National Association of Insurance Commissioners ("NAIC") to operate the proposed NIMA Clearinghouse for surplus lines tax collection and allocation pursuant to the Nonadmitted and Reinsurance Reform Act, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
To date, discussions have continued without final resolution on the possibility of the FSLSO handling Clearinghouse technical support in a scenario where the NAIC would provide corresponding operational and administrative support, inasmuch as the two entities have been at odds over many details.
The next Committee meeting is scheduled for August 4.
FSLSO Accounting and Financial Policies and Procedures Manual
The meeting agenda included review of proposed updates to the FSLSO Accounting and Financial Policies and Procedures Manual. These proposed updates include:
- An addition to the current section for "Capitalization Cutoff Points";
- Addition to the current "Refunds" section of a separate section on the Independently Procured Coverage ("IPC") refunds process;
- Removal of the section entitled "Billing Procedure – Agent Services fees (monthly)" and the addition of "Service Fees" in the revised current section for "Billing Procedure – Agent Fees, Taxes, Assessments and Surcharges";
- An update to the section for "Billing Procedure – IPC Fees, Taxes, Assessments and Surcharges" (regarding filings prior to July 1, 2011 and for those filed on or after July 1, 2011);
- An update to the "Billing Procedure – Compliance Review and Variance Penalties" section;
- Removal of the "Collection Procedures – Agent Services fees" section and inclusion of Service Fees in the revised current section for "Collection Procedures – Agent Fees, Taxes, Assessments and Surcharges";
- Removal of "Collection Procedures – IPC Services fees" section and inclusion of Service Fees in the updated current section for "Collection Procedures – IPC Fees, Taxes, Assessments and Surcharges."
Based upon the FSLSO Operational Assessment Report in the meeting materials, the FSLSO had a negative fourteen percent profit percentage for the second quarter of 2011.
Minutes from prior meetings of the Board and the Audit and Compensation Committees, a "Diligent Effort/Surplus Lines Disclosure Matrix," and a surplus lines disclosure form were part of the meeting packet, and are also attached.
Should you have any questions or comments please contact Colodny, Fass, Talenfeld, Karlinsky & Abate.