CITIZENS FAQ's UPDATE and CLARIFICATION
FSLSO continues to make modifications and updates to its current list of Frequently Asked Questions (FAQ's) regarding the Citizens Assessment in an effort to better assist its customers. Please note the following changes:
Q: What happens to any excess funds collected through the assessment should the aggregate dollar amount exceed the surplus lines portion of the Citizens’ deficit?
A: Surplus lines agents will collect the 6.84% assessment on all applicable policies issued or renewed during 2006. In the event that the aggregate dollar amount collected exceeds the total dollar amount needed to satisfy the assessment, then the additional funds will be retained in an interest-bearing lock-box account and used to offset future assessments of surplus lines insureds.
The FSLSO would like to provide clarification regarding the Citizens assessment as it applies to endorsements with effective dates after 2006. If a policy has a new or renewal effective date in 2006, any subsequent endorsements to that policy will be subject to the assessment.
For example, a policy that has been filed as new business with an effective date of 4/15/06 is assessed. On 2/15/07, an additional premium endorsement is added to the policy. This endorsement is also assessed, because it is associated with the 4/15/06 policy.
This scenario becomes problematic with certain contracts, i.e., "force placed programs" and contracts that extend past a one-year policy term, as the endorsements to the policy with an effective date originating in 2006 will be assessed. Therefore, it is suggested that policies with a term that extend beyond a year that have certificates drawn against the master policy be renewed annually, as to not unfairly assess a consumer in a year where the premium is initially collected and no assessment may actually be in force.
For a current list of Citizens FAQ's, please visit: