SLA - Surplus Line Association of California
SLA - Surplus Line Association of California
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FAQ - Filing Procedures

Q.  What kind of business is filed?

A. All surplus line insurance for California home state insureds should be filed, except for Ocean Marine, Aircraft or Spacecraft Insurance, Interstate Railroad, and Reinsurance. Refer to CIC Section 1760.5 for additional information.

Q.  What documents should be filed with the SLA?

A. The documents to be filed are the declarations page, certificates, cover notes, or binders for all new and renewal policies with corresponding SL-1 and SL-2 forms and endorsements (including non-money endorsements) for surplus line placements. The SL-2 form is not required if the type of coverage or risk meets the Export List requirements or the insured is a commercial insured and the disclosure and documentation requirements have been met..

Q.  Should all non-money endorsements be filed with the SLA?

A. Non-money endorsements correcting or amending information on the declaration page should be filed with us. Information changing the policy number, insured name, address, policy period, coverage, and insurer(s) is required to update the data in the SLA application for reporting purposes. The surplus line broker may submit non-money endorsements for SLA personnel to determine which documents are pertinent. The broker should batch the endorsements with a cover sheet that states ‘non-money endorsements’; a listing of the individual items is not necessary.

Q.  What are the SL-1 and SL-2 forms filing and record keeping requirements under Regulation 2190?

A. Effective 9/28/98 and after, filings received at the SLA should only include copies of the SL-1 Confidential Report of Placement and SL-2 Diligent Search Report forms. The surplus line broker who signs the SL-1 must retain the original for at least five years. The agent, broker or surplus line broker who signs the SL-2 form must maintain the original (also for five years) and send copies to all other agents, brokers or surplus line brokers involved in the transaction. Refer to SLA information. [Note: From discussions with the DOI, we understand that the requirement to "send copies" of the SL-2 to all other agents, brokers or surplus line brokers will be considered satisfied if the surplus line broker obtains and maintains a copy of the signed SL-2.]   “The SL-2 form is not required if the type of coverage or risk meets the Export List requirements” or the placement qualifies for the commercial insured exemption.

Q.  How should filings be submitted?

A. Filings should be submitted in batches of no more than 75 documents, with a coversheet. The batch coversheet is required and should include the following information: the assigned SLA broker number, name of the insured, whether the insured is an exempt commercial purchaser (ECP)/commercial insured, policy number, premium amount and stamping fee, invoice date, and percent of the risk allocable to California for each item in the batch and a grand total of items being filed. The listing should be in the same order as the documents in the batch.

We would also appreciate it if the coversheet could also include the type of document being filed, (i.e., new, renewal, endorsement, cancellation, extension endorsement or offset) and the total number of items in the batch.

Q.  How often should filings be submitted?

A. Filings should be submitted at least on a monthly basis. If filings exceed 100 items per month, it is recommended batches be filed weekly or twice monthly.

Q.  Who is responsible for making a filing if two or more persons licensed as surplus line brokers are involved in placing a policy?

A. If two or more persons licensed as surplus line brokers are involved in placing a policy, the one who is responsible for: negotiating, effecting the placement, and remitting the premium to the nonadmitted insurer or its representatives shall be considered transacting under his or her surplus line broker's license and responsible for making the filing. Refer to Section 1774(b).

Q.  Should documents within a batch be filed in a certain order?

A. Documents within a batch can be filed in any order, but the preference is new policies first, followed by renewals, then additional or return premium endorsements, cancellation endorsements and non-money endorsements last.

Q.  What information should be included on new and renewal policy declaration pages?

A. The following information should be included on new and renewal policy declaration pages filed with the SLA: policy number, name and address of insured, whether the policy is new or a renewal, type of coverage, policy term, premium amount and the insuring company(s). If the policy is a renewal, the prior year's policy number should also be included.

Q.  What information should be included on endorsements?

A. The following information should be included on endorsements filed with the SLA: policy number, name of insured, endorsement effective date, endorsement premium amount and whether it is a cancellation. It is also helpful if the endorsement includes the policy term of coverage and the insuring company.

Q.  What are the filing requirements for extension endorsements?

A. Endorsements extending the policy term for more than 90 days are treated the same as renewals and must include SL-1 and SL-2 forms. The SL-2 form is not required if the risk meets the Export List requirements or for placements under the commercial insured exemption.

Q.  Why is it important to file the policy before the endorsements to that policy are filed?

A. There will not be a record of policy on file if the endorsements are filed before the policy. This will result in the endorsements being tagged for a copy of the policy

Q.  How are the state taxes and stamping fees shown on filings?

A. State taxes and stamping fees must be shown separately on the policy and on any premium endorsement or cancellation.

Q.  What is a surplus line broker's certificate?

A. A surplus line broker's certificate is a document evidencing the placement of insurance with an eligible nonadmitted insurer. It must be signed by the surplus line broker, issued in the surplus line broker's own name (not in an insurer's name) and contain all of the essential provisions of the policy. It is issued under prior written authority (also known as "binding authority") from an insurer, or if the surplus line broker does not have a binding authority contract, then after receiving notification that the coverage has been obtained. Ordinarily, a surplus line broker's certificate is a temporary document used pending issuance of the formal policy, but it is sometimes used in lieu of a policy if issued under binding authority and containing complete terms of the insurance. Refer to CIC sections 381, 1764, and 1764.2. [Note: This should not be confused with a "certificate" issued as proof of insurance to third parties, typically by a retail agent/broker, such as an "ACORD certificate." See SLA Bulletin 763.]

Q.  What is a binder?

A. A binder is a temporary insurance contract providing coverage until the insurer either issues, or declines to issue, a formal policy. The binder is normally deemed to include the usual terms of the type of policy bound, unless otherwise stated in the binder.

Binders are sometimes called "cover notes" or "covering notes," especially by alien insurers. Refer to CIC sections 382 and 382.5 for additional requirements.

Q.  Should a binder be filed?

A. A binder should be filed if the policy is not issued within the 60 day filing requirement.

Q.  What information is required on the binder?

A. The binder should include the same information as required for a filed policy declaration page. Refer to CIC section 382.5 for additional information.

Q.  What if the binder does not include all the required information?

A. If a binder does not contain all the required information, the policy must be filed once it is received. The broker should include a notation indicating this item was previously filed as a binder and file the policy as a non-premium item.

Q.  What if the policy premium is different from the premium submitted on the binder?

A. If a policy premium is different from the premium originally submitted on the binder, the broker should file the policy in a premium batch as an "Office Records Only" (O.R.O.) endorsement, indicating the binder premium is to be offset. The original premium should be shown as a credit and the actual premium as a debit.

Q.  Is it necessary to file a policy if all the required information was previously filed with the binder?

A. It is not necessary to file a policy if a binder was filed and contained all the required information.

Q.  What is a master policy?

A. A master policy is a single contract issued to a group, such as an employer, association or other entity, and filed on a group basis. This type of coverage is usually issued for an indefinite term, so there is no expiration date. Group members receive certificates as evidence of membership summarizing benefits provided and are generally treated as third party beneficiaries of the master policy.

Q.  What are the SL-1 and SL-2 form requirements for a master policy?

A. If the master policy is filed with a master policy number and one group name, SL-1 and SL-2 forms are required on the inception date of the master policy. New SL-1 and SL-2 forms would be required on the anniversary of the inception date. If the individual insured is being filed separately under the certificate name and number, it would be treated as individual policies and SL-1 and SL-2 forms would be required for each one.

Q.  What are the filing requirements for placements with Lloyd's syndicates?

A. For Lloyd's placements effective 1/1/97 and after, the surplus line broker must identify syndicates used on all new, renewal policies and extension endorsements. Each policy must include the individual syndicate numbers and percentage of participation for each syndicate. These syndicates must be on the List of Eligible Surplus Line Insurers.

Q.  What constitutes a late filing?

A. Policy/certificates and SL-1 and SL-2 forms received by the SLA more than 60 days after placing the insurance with a nonadmitted insurer constitutes a late filing. SL-2 forms are not required if the type of coverage or risk meets the Export List requirements.

Q.  How does the SLA acknowledge a filing?

A. Each month the surplus line broker will receive a billing statement. This statement is called a Policy Detail Activity Report. This report includes a detailed listing of all the filings processed within that month plus the premiums, stamping fees for each item, an invoice with stamping fees due for that month, and any prior month with an outstanding balance.

Q.  Are Risk Purchasing Groups (RPG) handled differently from other surplus line placements?

A. Risk Purchasing Group placements are not treated any differently from other surplus line placements. A licensed California surplus line broker (either resident or non-resident) must be involved in the transaction, and a copy of the policy with SL-1 and SL-2 forms must be filed with the SLA.   “The SL-2 form is not required if the type of coverage or risk meets the Export List requirements”.