A surplus lines insurers group is raising objections to the Delaware Insurance Department's call for data the state says it needs to reconcile the insurers' reports with broker financial reports.

The National Association of Professional Surplus Lines Offices, which is objecting, said Texas, Missouri and Connecticut are among other states that have made such requests.

Steve Stephan, government affairs director for NAPSLO, said in a statement that the request imposes a burden on surplus lines companies since they may not have stored such data in the normal course of business because in the past they have not been subject to the same level of reporting as admitted companies.

NAPSLO said in a statement it objects to such requests because the surplus lines industry has been historically regulated by the states through the brokers.

Delaware's request for a large amount of data reporting by surplus lines insurers runs counter to the history of the surplus lines industry, Mr. Stephan said.

Delaware regulators claim the information is needed to make sure surplus lines writers are operating within the law and paying their proper premium tax, according to NAPSLO.

However, Mr. Stephan said, “If a state insurance department has a reason to think that a broker is noncompliant or that all taxes have not been remitted, the department should focus its effort on investigations of the suspected brokers.”

“To require all brokers and all insurance companies to report is an unreasonably burdensome method of trying to validate that surplus lines tax has been remitted.”

In addition, Mr. Stephan said the method is not likely to result in any definitive analysis since surplus lines carriers can independently earn premium and the broker may have reported the premium in a different time period.

Finally, Mr. Stephan said, the broker is required to allocate tax among the various states, the methods of which may vary, resulting in data not likely to tie to anything in the insurers' data.

Special Reports /

Surplus Lines Writers Object To Data Call

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