TDI Commissioner’s Bulletin B-0048-11 – Late-Filed Policy Information

Fees, Safe-Harbor Provision, and Enforcement Matters
Concerning Late-Filed Surplus Lines Policies

The Texas Department of Insurance (TDI) issued the attached bulletin to inform surplus lines agents about new requirements under Section 981.105 of the Texas Insurance Code. The requirements, which became effective May 28, 2011, include late-filing fees, a safe harbor provision, and possible enforcement actions. TDI is offering a December 2011 settlement program for resolving pending disciplinary matters regarding late-filed surplus lines policies.

TO: ALL SURPLUS LINES INSURANCE AGENTS LICENSED IN TEXAS

RE: Fees, safe-harbor provision, and enforcement matters concerning late-filed surplus lines policies

The Texas Department of Insurance (TDI) issues this bulletin to inform surplus lines (SL) agents about new requirements under Texas Insurance Code Section 981.105. The requirements, which became effective May 28, 2011, include late-filing fees, a safe harbor provision, and possible enforcement actions. TDI is offering a December 2011 settlement program for resolving pending disciplinary matters regarding late-filed SL policies.

Late-Filing Fees

Texas Insurance Code Section 981.105(a) requires an SL agent to file a new or renewal SL policy with the Surplus Lines Stamping Office of Texas (SLSOT) within 60 days of the date a policy is issued or becomes effective. The new law provides two regulatory options for SL agents who have filed policies late: fees and penalties. The chart below shows the fee amounts.

When was the policy filed?	Past filing behavior - percentage of policies filed late in the prior year	Fee per policy
61 to 180 days after the policy effective or issue date	Not more than 5 percent	$50
61 to 180 days after the policy effective or issue date	Greater than 5 percent	$100
181 to 364 days after the policy effective or issue date	Less than 2 percent	$200

If you must pay a fee, TDI will send you notice of the late filings and corresponding fees. TDl’s Enforcement Section will not initiate formal disciplinary action for those late-filed policies if the fees are paid timely. For more information about the calculation or remittance of fees, please contact Kathy Wilcox at 512-322-3535 or Kathy.Wilcox@tdi.state.tx.us.

Safe-Harbor Provision

Until January 1, 2012, agents may self-report late-filed policies with effective or issue dates before January 1, 2010, and pay a $50 fee per policy. This provision does not apply to policies that have already been listed on an SLSOT late-filers report.

Penalty Provisions

The new law provides for disciplinary action and penalties if:

• the late-filed policy fee is not paid within 30 days;
• a policy is filed on or after the 365th day; or
• a policy is filed 181 to 364 days after the policy issue or effective date and more than 2 percent of SL policy filings were late in the prior year.

TDI December 2011 Settlement Program

To help resolve pending SL late-filed policies disciplinary matters, TDl’s Enforcement Section will offer special incentives for settlement during December 2011. Pending disciplinary matters include actions about:

• late-filed policies with issue or effective dates before January 1, 201 O, that appeared on the SLSOT late filed reports and
• late-filed policies with issue or effective dates after January 1, 2010, that are subject to the noted penalty provisions.

Staff will contact agents with pending disciplinary matters to offer resolution through Consent Orders. The fines will be $50 per late filed policy. The fines may be adjusted as mitigating circumstances warrant. Acceptance of these special settlement offers is optional. For questions about the settlement program, please contact Stephen Chen at 512-322-3428 or Stephen.Chen@tdi.state.tx.us. After the December 2011 Settlement Program, penalties for late filers will be assessed based on the guidelines in Texas Insurance Code Section 84.022.

Eleanor Kitzman
Commissioner of Insurance