Broker Filing Procedures

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. [Note: From discussions with the CDI, 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.

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

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 surplus line insurer (or its representatives) shall be considered transacting under his or her surplus line broker's license and shall be responsible for making the filing. Refer to CIC Section 1774(b).

Documents within a submission can be filed in any order. However, the following order is preferred: new policies, followed by renewals, then additional or returned premium endorsements, cancellation endorsements, and non-money endorsements.

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.

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.

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.

There will not be a record of a 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.

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

A surplus line broker's certificate is a document evidencing the placement of insurance with an eligible surplus line 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, it is issued 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 it is issued under binding authority and contains 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 Bulletin #763.]

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 Non-U.S. insurers. Refer to CIC sections 382 and 382.5 for additional requirements.

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

The binder should include the same information as that which is required to be on the declaration page for a filed policy. Refer to CIC section 382.5 for additional information.

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 that indicates this item was previously filed as a binder, and proceed to file the policy as a non-premium item.

If a policy premium is different from the premium originally submitted on the binder, the broker should file the correction in a premium submission 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.

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

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, which summarize provided benefits. Group members are generally treated as third party beneficiaries of the master policy.

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.

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

Policy certificates, as well as SL-1 and SL-2 forms received by the SLA more than 60 days after insurance is placed with a surplus line insurer constitute late filings. SL-2 forms are not required if the type of coverage or risk meets the Export List requirements.