Surplus lines agents doing business in North Carolina can now begin registering with the recently established North Carolina Surplus Lines Stamping Office as new rules regarding resident and non-resident surplus lines licenses are set to take effect.
As of Jan. 1, 2017, every surplus lines licensee operating in North Carolina, resident or non-resident, must now be a member of the North Carolina Surplus Lines Association (NCSLA). The new requirement is in accordance with House Bill 262, which was passed during the 2015 legislative session to modernize the state’s Surplus Lines Act.
The law led to the creation of the North Carolina Surplus Lines Stamping Office, which will be run by the NCSLA, and serve as the mechanism to register and assist all users of the state’s new filing system, the North Carolina Surplus Lines Information Portal, or SLIP.
SLIP allows North Carolina licensees to file their policies, endorsements and surplus lines taxes owed to the state directly online. The system is currently also used by several other states including Florida, California, Mississippi and New Jersey.
NCSLA will work with the North Carolina Department of Insurance (NCDOI) in the collection of surplus lines taxes, as well as doing compliance and variance audits to ensure credibility of the information entered into the SLIP system, according to NCSLA Executive Director Steve Allen.
The state is hoping that by mandating both resident and non-resident agents to utilize the SLIP system through the North Carolina Stamping Office, the state will be better able to collect surplus lines premium taxes it wasn’t receiving before.
“Not only do we think this will help create additional tax revenue for the state, but it also makes it easier for everyone to file taxes. Some people that didn’t before will start filing now,” Allen said.
Allen said they have spent the last several months testing the SLIP system and making sure it is ready to start registering licensees. Now, he said, the focus is on informing all agents doing surplus lines business in the state that they need to be registered by Jan. 1.
The new law says that any licensees who do not comply with the requirements of the new statute will be subject to having their North Carolina license cancelled and will be denied access to the tax filing system.
“One of the biggest challenges we have right now is getting the information on the new stamping office out to the licensees in preparation for the January 1 rollout. We have email addresses, we’ve emailed, we’ve called. We still have a lot of them that we haven’t made contact with,” Allen said. “We need to get the word out so we can get everybody registered before the January 1 effective date.”
Allen said as of the end of November, about 2,050 agents had registered and 350 still had not. Allen said the NCDOI is helping NCSLA contact these agents to see if they are going to become compliant with the new statutes or if they want to relinquish their license.
As of Jan. 1, 2017, all new and renewal policies and endorsements on these policies must be filed using the NCSLA SLIP system. The only exceptions are purchasing groups and independent procurement policies which will be handled by the NCDOI as they have been in the past.
NCSLA will charge a .4 percent stamping fee on all new policies and renewals with an effective date of Jan. 1, 2017 and after, and endorsements on these filings. Additional information on processing and fees is available on the NCSLA’s website on the Stamping Office information page.
Allen said NCSLA has financially supported the new system for North Carolina, which replaces the “antiquated” one the state had been using. But getting the North Carolina Surplus Lines Stamping Office up and running was a coordinated effort with NCDOI and others, Allen said, including the Florida, Mississippi and Washington Surplus Lines stamping offices.
“Without them, we wouldn’t have got this far,” he said.
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