The
Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law earlier this year are an effort to create more uniform surplus lines licensing and regulatory processes, says NIPR. The law was created to prohibit states from collecting surplus lines licensing fees, unless surplus lines producers are participating in a national database for licensing and renewals.
Surplus lines (or non-admitted insurance) are defined as providing coverage for unusual risks typically unavailable in the traditional insurance marketplace. When a consumer or business entity with higher risk and liability needs coverage that cannot be offered by a licensed insurance producer through an admitted insurer, the risk is typically placed by a licensed surplus lines producer with a non-admitted authorized surplus lines company, says NIPR.
NIPR says that as regulations vary from state to state, producers may have to seek permission and licensure to operate in a non-admitted market before insuring the risk in a particular state. The digital capabilities provided by NIPR are designed to give producers a paperless system that will improve the efficiency of meeting various state requirements. With a paperless option, surplus lines producers no longer have to physically present the regulatory state with paperwork, and the state will no longer have to continually review this paperwork, since everything will be online, says NIPR.
By July 2012, all states are required to participate by submitting their surplus lines producer licensing information to the national producer database, and NIPR is working with each jurisdiction to implement the electronic system for initial licensing and renewals, says NIPR.
