Premium Reconciliation
How does the Premium Reconciliation program work?
Since its inception in 2000, the Premium Reconciliation program has been highly effective in the collection of taxes, fees, and assessments relative to unreported premium. In 2018, more than $70 million in unreported premium was identified, resulting in the collection of more than $2.5 million in taxes, fees, assessments, and penalties.
As Florida eligible surplus lines insurers submit policy data to FSLSO, the system automatically “matches” its correlating policy information submitted by Florida surplus line agents or Independently Procured Coverage (IPC) filers regarding the same policy. Information is linked based on several factors including policy number, premium amount, insurer name, and effective date.
As an example, Agent John Doe submits policy information on a Commercial Property policy written through XYZ Insurance Company. XYZ Insurance Company is also required by Florida Statute to file policy information regarding the Commercial Property policy written with Agent John Doe. Both parties submit policy information for the risk and is “matched” and reconciled through FSLSO’s database.
What happens if there is not a match for the policy information?
There are times when policy information submitted by the insurer does not match with a surplus lines agent or IPC filing. At this point, the Premium Reconciliation staff works to find the appropriate corresponding policy information to match up with the insurer filing.
The Premium Reconciliation staff primarily uses four components to match insurer filings with agent and IPC filings including:
- Policy number
- Premium amount
- Effective date
- Insurer name
If the matching filing cannot be located, the staff will contact the insurer to gather additional information, including the name of the agent or agency contact information, as well as a copy of the declarations page.
Staff will then contact the responsible party to inquire if the matching policy filing was made and to request the confirmation number for the policy in question if it was filed. If necessary, the Premium Reconciliation staff may also request that the agent or IPC filer provide additional documentation.If the policy submission has not been made, the Premium Reconciliation staff will request it be done at the earliest convenience to avoid any late payment penalties that could accrue. The Premium Reconciliation staff has up to 180 days to reconcile the outstanding policy before it is referred to the Department of Financial Services or the Office of Insurance Regulation.
What happens when a filer neglects to file policy information?
For agent filings, the agent shall pay interest on the amount of any delinquent tax due, at the rate of 9% per year, compounded annually, beginning the day the amount becomes delinquent per F.S. 626.936(2). For IPC filings, the tax imposed hereunder, if delinquent, shall bear interest at a rate of 6% per year, compounded annually per F.S. 626.938(5).
Why would policy information not match and reconcile automatically?
The most common errors are discrepancies between premium submitted by the agent/IPC filer and the insurer. Please make sure to submit the premium as it appears on the declarations page of the policy.
Incorrect Policy Number
There are a variety of factors that can contribute to an insurer filing not matching with a corresponding agent or IPC filing, attributable to human error when making the submission. As one of the matching criteria is the policy number, the addition of extra characters such as letters, numbers, hyphens, and spaces will lead to an unmatched policy number. One way to avoid this is to make sure that the policy number submitted to FSLSO is the same as the one on the policy’s declarations page. This way, both the insurer and agent/IPC filer are submitting the same policy number.
Incorrect Insurer
Relative to the agent and IPC filer, it is common to find that the wrong insurer was selected when making the policy submission. When filing policy information, please be sure to select the insurer shown on the declarations page. If the policy has multiple insurers with premium associated with each, the filing should have the insurers and their portion itemized when making the submission to our office. Since several insurers have similar names, extra care should be taken when submitting the insurer’s name.
Incorrect Effective Date & Insured Name
Submitting the incorrect effective date will also create a variance. Be sure to include the exact effective date as listed on the policy or endorsement. The same is also applicable to the insured’s name. When submitting the insured name, you will need to include the entire insured name, as stated on the declarations page, when filing with the FSLSO. Do not submit the “doing business as” (DBA) portion of the name.
Who do I contact if I have additional questions about Premium Reconciliation?