Compliance FAQs
A Basic Review is a review of an agent who is currently writing or has written surplus lines business within the last three years.
The review verifies the status of the agent’s surplus lines license and proper reporting of surplus lines policies. FSLSO will review randomly selected policies to ensure compliance is maintained under the Florida Surplus Lines Service Office Agent Procedures Manual.
Q: If the total dwelling replacement cost of residential structures insured by one policy totals $700,000 or more, but not one individual structure has a dwelling replacement cost of $700,000 or more, would the exemption requiring only one declination apply? (For example, if there were three separate condominium structures each with a dwelling replacement cost of $400,000 covered under one policy for a total of $1.2 million.)
A: No, the exemption requiring only one declination will not apply if there is no single residential structure with a dwelling replacement cost of $700,000 or more. Even though one policy will be issued to cover all of the buildings included in a single condominium association, an agent cannot use the aggregate replacement cost value of the buildings to reach the threshold. This is because the language in the statute specifically refers to “the residential structure.” The agent will only need one declination if any residential structure has a dwelling replacement cost of $700,000 or more, but the qualifying structure must be “residential.” It must have dwelling units and cannot be solely a pool, commercial unit, or other common area.
Q: If an individual coverage such as liability was written on a residential structure with a dwelling replacement cost of $700,000 or more, would the one declination exemption apply?
A: Yes. So long as the residential structure has a dwelling replacement cost of $700,000 or more, any type of coverage that requires a diligent effort would require only the one declination. Section 626.914(4), Florida Statutes, does not limit the type of coverage sought to a property policy. It specifically states: “diligent effort means seeking coverage from and having been rejected by at least one authorized insurer currently writing this type of coverage and documenting this rejection."
Applicable coverage codes:
- 1000 Commercial Property
- 1001 Builders Risk - Commercial
- 1003 Apartments - Commercial
- 1005 Commercial Package
- 1006 Condominium - Commercial
- 1017 Collateral Protection (force placed coverage)
- 2000 Homeowners-HO-1
- 2001 Homeowners-HO-2
- 2002 Homeowners-HO-3
- 2003 Homeowners-HO-4 - Tenant
- 2004 Homeowners-HO-5
- 2005 Homeowners-HO-6 - Condo Unit Owners
- 2006 Homeowners-HO-8
- 2007 Builders Risk - Residential
- 2009 Dwelling Property
- 2010 Farmowners Multi-Peril
- 2011 Mobile Homeowners
State and governmental entities are NOT exempt and therefore are also assessable.
There are two categories of TIQs: financial and non-financial. A financial TIQ is one that is not invoiced or credited until corrected. There are two types of financial TIQs, Unbalanced Returned Premium (URP) and Unbalanced Returned Policy Fees (URF). FSLSO staff members cannot manually accept financial TIQs; they can only be corrected and accepted by the user.
*This does not include medical malpractice or professional liability for a licensed medical facility or personnel.
Unbalanced Returned Premium (URP)
This TIQ indicates that a return premium transaction or cancellation transaction has been submitted with premium greater than the total premium submitted for that particular policy term. The Unbalanced Returned Premium (URP) TIQ is a financial TIQ. FSLSO staff members cannot manually accept financial TIQs, they can only be corrected and accepted by the user.
Unbalanced Returned Policy Fees (URF)
A transaction will be questioned if the policy fees submitted with a return premium transaction or a cancellation are greater than the total policy fees submitted for that particular policy term. The Unbalanced Returned Policy Fees (URF) TIQ is a financial TIQ. FSLSO staff members cannot manually accept financial TIQs, they can only be corrected and accepted by the user.
Tax Status 2 (TS2)
This tax status should only be used when insuring risks of the state government, counties, municipalities, or their agencies. Due to this exemption status, all new business and renewal transactions (initiating transactions) are questioned when submitted to allow a FSLSO staff member the opportunity to verify the exemption. Documentation may or may not be requested by a FSLSO staff member. Once the staff member is satisfied the insured is in fact exempt from the tax and service fee, the questioned transaction will be manually accepted by a FSLSO staff member.
Tax Status 4 (TS4)
This tax status was specifically created for property policies covering hospitals that are members of an alliance. This tax status is exempt from the surplus lines tax, service office fee, and assessments. However, the EMPA surcharge applies. Due to this exemption status, all new business and renewal transactions (initiating transactions) are questioned when submitted to allow a FSLSO staff member the opportunity to verify the exemption. Documentation may or may not be requested by a FSLSO staff member. Once the staff member is satisfied the insured is in fact exempt from the tax and service fee, the questioned transaction will be manually accepted by a FSLSO staff member.
Tax Status 5 (TS5)
This tax status was created for entities that are exempt from the surplus lines tax, service fee, assessments, and the EMPA surcharge, but are required to be filed by law because they are premium bearing. Due to this exemption status, all new business and renewal transactions (initiating transactions) are questioned when submitted to allow a FSLSO staff member the opportunity to verify the exemption. Documentation may or may not be requested by a FSLSO staff member. Once the staff member is satisfied the insured is in fact exempt from the tax and service fee, the questioned transaction will be manually accepted by a FSLSO staff member.
Standalone Type 2 Transaction (SA2)
This TIQ occurs when an additional premium transaction has been filed and there is no existing new business or renewal filing. The Standalone Type 2 Transaction (SA2) TIQ can only be corrected by the user.
Credit Verification (CV)
This TIQ occurs when a return premium or cancellation transaction has been submitted that meets certain guidelines set forth by FSLSO. The Credit Verification (CV) TIQ has to be worked by a FSLSO staff member and documentation of the credit is required. If you receive a questioned transaction for this reason you can be proactive and upload a copy of the endorsement in SLIP and submit it to FSLSO. If the documentation is not uploaded in SLIP, a FSLSO staff member will email you for the documentation.
Extends Policy Expiration Date (EE2)
This TIQ occurs when an endorsement is filed that extends the policy expiration date for 365 days or greater. The Extends Policy Expiration Date (EE2) TIQ was put in place to allow FSLSO the opportunity to charge the most current premium tax, service fee, and assessments. It is common to extend the expiration date of an insurance policy, but when you are given the responsibility of collecting assessments for other state entities and protecting consumers, it is important to collect the most current rate. It is for this reason we ask that you file a renewal transaction when extending the policy expiration date for 365 days or greater, even if the insurer did not renew the policy.
The rate charged is determined by the effective date of the most current new business or renewal transaction filed. For example, the Service Office fee has changed several times over the years. In January of 2017 the Service Office fee was 0.15% but changed to 0.1% for all new and renewal policies with an effective date between April 1, 2017 – March 31, 2020. If an agent had a policy effective January 1, 2017-January 1, 2018 and extended the expiration date to January 1, 2019 by an additional premium endorsement, FSLSO staff would direct the filer to file a renewal transaction effective the anniversary date of January 1, 2018 in order to update the calculation of the Service Office fee to 0.1%. If an additional premium had been filed the Service Office fee would continue to be charged at 0.15% due to the January 1, 2017 new business transaction effective date.
Unknown or Ineligible Surplus Lines Agent (NAG)
This TIQ will occur if the agent was not licensed and/or appointed on the effective date of the policy. The Unknown or Ineligible Surplus Lines Agent (NAG) TIQ has to be worked by a FSLSO staff member and can be caused for several reasons such as a temporary lapse of the agent’s surplus lines self-appointment. A Florida surplus lines agent is required to be licensed and self-appointed when placing business.
Unknown or Ineligible Insurer (NIN)
This TIQ can occur when the transaction has an incorrect insurer NAIC number or the insurer is not an eligible surplus lines insurer. The Unknown or Ineligible Insurer (NIN) TIQ will occur when the user has selected “Other Surplus Insurer” from the insurer drop down menu or submits through Batch. “Other Surplus Lines Insurer” should only be used when placing 12.5% or less of the coverage with an ineligible insurer pursuant to 626.918(6), F.S. If the transaction is questioned for this reason, a FSLSO staff member will accept the questioned transaction after receipt of proper documentation. This TIQ also occurs when an insurer has changed their name midterm during the policy and an endorsement is filed with the insurer’s previous name. The user will need to make this correction.
Invalid Coverage Code/Tax Status Combination (CTS)
A transaction will be questioned if a coverage code is submitted with a tax status that does not apply to that particular coverage code.
Please note: This TIQ type only occurs as a result of submissions made via Batch. The SLIP environment is programmed so this will not occur.
Certain coverage codes such as motor truck cargo, ocean marine, and aviation are exempt from the surplus lines premium tax and have a specific tax status. SLIP has been programmed to only allow each coverage code’s specific tax status, however Batch allows all tax statuses which will create this questioned transaction. Only the user can correct this questioned transaction.
Eligible Agency Not Found (NAY)
This TIQ occurs when a transaction is submitted with an agency that is no longer active in our database. The Eligible Agency Not Found (NAY) TIQ will need to be worked by a FSLSO staff member. Florida requires each place of business that engages in any activity which may be performed only by a licensed insurance agent hold an insurance agency license. If the agency license number you are filing under is no longer active in our database you will receive this questioned transaction.
There may be steps you need to follow to update your agency information. A FSLSO staff member will advise what steps needs to be taken, if any.
Zero Premium (ZP)
This TIQ occurs when a transaction is submitted with a 0 in the premium field and a dollar value in the policy fee field. The Zero Premium (ZP) TIQ can only be accepted by a FSLSO staff member. We do not allow transaction filings if zero has been entered in both the premium and policy fee fields. We will allow a filing with zero in the premium field if there is a dollar value in the policy fee field, however, it will be questioned because Florida has strict guidelines concerning additional fees.
An FSLSO staff member will review each ZP TIQ to determine the validity of the additional fee and either accept the questioned transaction or inquire further.
Future Effective Date (FED)
Transactions that are submitted more than six months in advance of the effective date are questioned in order to verify the validity of the effective date. If you receive the Future Effective Date (FED) TIQ, verify the effective date of the transaction. Typically the user has made a simple error and entered the incorrect year. If this is so, edit the date. If the date is correct, contact an FSLSO Analyst to advise the date is correct and we will manually accept the questioned transaction.
New Business Renewal (NBR)
This TIQ occurs when a new business and a renewal transaction have been filed with the same effective date. The New Business Renewal (NBR) TIQ has to be corrected by the user before it can be manually accepted by a FSLSO staff member.
Invalid State Specified (ISS)
This TIQ only applies to multistate transactions and can be triggered for several reasons.
If a multistate Batch file with an initiating transaction effective on or after July 1, 2020 is submitted using any state allocations other than Florida or Non-Florida, it will be questioned. SLIP is programmed to only accept Florida or Non-Florida after June 30, 2020.
If an endorsement is filed on an initiating transaction effective on or after July 1, 2020, and the initiating transaction is subsequently backed out, it will be questioned. Once the initiating transaction is backed out, the endorsement becomes either a standalone type 2 transaction (SA2) or would be associated with an initiating transaction effective prior to July 1, 2020, triggering the ISS TIQ.
An initiating transaction effective prior to July 1, 2020 (i.e., June 1, 2020) and a subsequent endorsement effective after July 1, 2020 (i.e., July 15, 2020) are filed using state-by-state premium tax allocations. Then, an initiating transaction effective on or after July 1, 2020 (i.e., July 2, 2020) is filed on the same policy. The endorsement transaction will be questioned because it would now be associated with an initiating transaction effective on or after July 1, 2020, meaning the state allocation selections will need to be updated to Florida and Non-Florida.
Only the user can correct this questioned transaction.
The face page is required for new and renewal policies but not endorsements or cancellations as long as the necessary financial information (premium, tax, fees, and applicable assessments) is disclosed.
A desk review is a compliance review conducted by the Compliance Review analyst from their office. Information can be transferred between the analyst and the agent via phone, email, fax, or postal service. This type of review is better suited for Basic Reviews of agents with minimal policies to review.
An on-site review is a compliance review conducted in the agent’s office.
All new and renewal policies effective prior to July 1, 2020, and any subsequent endorsements on those policies will still be taxed at the original rate of 5%.
For example, the tax rate for a policy effective January 1, 2020 is 5% of the gross premium. An additional premium endorsement effective July 1, 2020 would also be taxed at 5%. If the policy is cancelled effective August 1, 2020, the tax credit is 5% of the returned premium.
When these transactions are reported to FSLSO via SLIP or XML Batch, the system will calculate the appropriate taxes based on the effective date of the new or renewal policy.It does not affect multistate policies with effective dates prior to July 1, 2020.
Multistate policies where Florida is the home state will still be taxed at 5% for the Florida portion and the applicable state tax rate for the other states.
For example, if you have a Florida home state policy effective on June 30, 2020, broken out as follows:
- Florida = $5,000
- Georgia = $2,000
- Alabama = $2,000
It would be reported in SLIP as: Florida = $5,000, Georgia = $2,000, and Alabama = $2,000.
Premium is taxed at the rate of the state of exposure. Any subsequent endorsements would be reported to FSLSO with the state-by-state premium allocation and would be taxed at the rate of the state of exposure.If your agency name and license number are not in the Available Agencies box on the Settings page in SLIP, contact Agent Services at agent.services@fslso.com and provide the following information:
- Agency Name
- Agency License Number
- Agency FEIN
- Agency Address
- Agency Phone Number
- Agency Email
If the agency is licensed as required by the Florida Department of Financial Services, we will add the agency to our database.
Multistate policies where Florida is the home state will be taxed at 4.94% for the Florida portion and 4.94% for the rest of the states, as well.
For example, if you have a Florida home state policy effective on July 2, 2020, broken out as follows:
- Florida = $5,000
- Georgia = $2,000
- Alabama = $2,000
It would be reported in SLIP as: Florida = $5,000 and Non-Florida = $4,000.
Premium is taxed at 4.94%, regardless of the state in which there is exposure. Any subsequent endorsements would be reported to FSLSO with the Florida and Non-Florida premium breakdown, and the entire premium would be taxed at 4.94%.Yes, enter the policy number exactly as it appears on the declarations page, including any special characters.
Do not add any prefixes or suffixes assigned by the agency for filing purposes. Doing so will cause a discrepancy in our reconciliation process.