You’ve just finished processing a stack of surplus lines policy filings or a premium tax report or two. A normal response is, Phew! I’m glad THAT’s over. Be careful, though; it may not be that straightforward. If a filing or policy is tagged, there’s more work to do. A tag indicates that a surplus lines transaction has inaccurate or missing information. Not every jurisdiction uses the term “tag.” Florida, for example, refers to them as “Transactions in Question” or TIQs.
Common examples of tagged items include:
- Use of an outdated form (or the incorrect form the filing period)
- Incomplete or missing policy or binder
- Omission or incorrect formatting of the state stamp (where required)
- Failure to document a diligent search effort (where required)
- Illegible, incomplete, or missing information
- Use of an invalid coverage code
- Late filing of a policy with no explanation
- Endorsement to or renewal of a policy not recorded as filed
- Inaccurate calculation of premium tax and/or stamping fees
- Placement of business with an ineligible insurance carrier
- Use of digital/electronic signature in a state that requires a “wet” signature
Identifying the Problem
Frequently, it’s the surplus lines stamping office—or the state surplus lines association acting in that capacity—that tags such errors. Serving as an intermediary between brokers and state officials is a key function of these organizations. In jurisdictions that don’t maintain a stamping office, regulators themselves may tag deficient transactions.
Most states that utilize online portals for filings and reports show tags on these sites. Often, the surplus lines licensee or contact person listed for the online account will receive an email alert as well. Tag notices generally describe the nature of the problem and may offer suggestions for clearing the tag. Usually, filers can see tagged transactions within 24 to 48 hours of submission. In some states, however, regulators acknowledge receipt of a filing or report promptly, but may not review the document until much later. Factors such as the current staffing level at regulatory offices and the volume of transactions to be processed play a big role in creating such lag times. That’s why is important to periodically check the status of filings or reports until regulatory approve them.
Once an issue is tagged, it’s usually a straightforward matter to resolve it. In states with online portals, an authorized user can log into the account, locate the tagged filing or report, make the required changes, and re-submit the form. There should be a rapid confirmation of the submission, and often the tag will show as resolved. Otherwise, email or mail the corrected documents to the regulator (as instructed) and retain confirmation of their receipt. There is no fee or penalty for making such corrections, and they do not count as “endorsements” unless the error appears in the surplus lines policy document itself.
It is essential to resolve tags promptly. Tag notices often give filers a specific timeframe in which to correct the error(s). Thirty days is common, although some states allow longer periods for more complex issues. After that period elapses, the filing or report is released to the state insurance department as-is— with the tag clearly noted. Depending on the nature of the tag, the commissioner may reject the filing or report and possibly impose a fine or other regulatory penalty.
Additionally, submitting an inaccurate or incomplete filing or tax report doesn’t stop the compliance clock. Delays in addressing tags—even in states where regulators may not provide notice of deficiencies quickly—can take filers past a compliance deadline. Then, filers face not only the consequences of the original error, but also penalties for a late filing. It’s another reason for having a robust compliance process with double-checks and for submitting filings as soon as allowed by the regulator.
Find out how ReSource Pro helps insurance agencies and producers meet their licensing and compliance needs by visiting our compliance page.