Surplus

What is the eligibility of Export?

1) The risk is not procurable from admitted insurers. 2) The premium rate shall not be lower than the premium in the admitted market. 3) Policy is not more favorable as to coverage or rate than under similar contracts on file and in use by admitted insurers. 4) Deductible amounts are similar to those available under similr policies in use by admitted insurers. 5) For personal residential property risks, the retail or producing agent must advise the insured in writing that coverage may be available from Citizens Property Insurance Corp. 6) The commission may by rule declare classes of risks eligible for export if there is no reasonable or adequate market among admitted insurers.

Use of an unauthorized ineligible insurer with the DFS approval may result in the following?

a) Personal liability by the agent for any unpaid claims b) Replication of the license from the ineligible unauthorized insurer c) Closure of the agents office for a period of 30 days or more d) penalty of $500 per day of unfiled SLIP records Answer: A

Use of an unauthorized ineligible insurer with the department of Financial Services approval may result in the following?

a) Personal liability by the agent for any unpaid claims b) Replication of the license from the neligible unauthorized insurer c) closure of the agents office for a period of 30 day or more

The Surplus Lines agent is allowed to _____________ the Service fee assessed on the total gross premium of each surplus lines policy or document.

a) Rebate b) Co-mingle Bonds c) Collect d) Absorb Answer: C

The insurance rating organization which performs both qualatative and quantative evaluations of insurers is?

a) Standard and Poors b) Demotech c) AM Best d) Weinstein Rating Services Answer: c

All of the following are correct with regards to authorization of surplus lines insurance except?

a) The insurance must be placed through a licensed surplus lines agent or representative of the eligible lines insurer b) The insurance must be eligible for export c) The insurer must be an eligible surplus lines insurer in the state d) The insurance coverage cannot be procured from authorized insurers (standard lines) Answer: a

The FSLSO agent software permits agents to file transaction reports in which of the following methods?

a) XML batch only b) SLIP only c) XML batch and SLIP d) none of the above are correct Answer: c

For an unauthorized insurer to become an eligible surplus lines insurer by law they must meet which of the following?

a) a request must be made in person to the FSLSO office b) The insurer must have and maintain a surplus of not less than $15 million c) Alien insurers must maintain a trust fund in the U.S.A of not less than $4.5 million d) All of the above are correct Answer: b

An individual licensed and appointed to handle the placement of insurance coverage with eligible unauthorized insurers or to place such coverage with authorized insurers for which the licensee is not appointed as an agent is known as?

a) an export agent b) eligible surplus lines insurer c) surplus lines agent d) Lloyds broker Answer: c

Which of the following statements is correct concerning cancellation or non-renewal of surplus lines policy?

a) during first 90 days the insured must be given 45 days written notice of cancellation b) for non-payment of premium the insured must be given 20 days written notice c) after the first 90 days the insured must be given 60 days written notice of cancellation d) none of the above Answer: d

Insurance contracts procured in accordance with Florida statute are.

a) fully enforceable and valid b) invalid because the Florida Guaranty Fund does not apply c) Valid only if registered with the Florida Lines Association d) not valid if premium has not been paid to the carrier or retail agent Answer: a

The relationship between wholesale agents & unauthorized insurers is similar to the relationship between/

a) independent retail agents b) foreign insurers c) managing agents d) underwriting dealers Answer: a

What is the definition of diligent effort?

a) obtaining the lowest premium quote b) explaining all relevant policy conditions to the insured c) placing coverage with the highest rated authorized insurer d) 3 rejections from authorized insurers currently writing the applicable coverage Answer: d

The regulatory framework for surplus lines insurers protects both states & consumers in which of the following ways?

a) permits consumers to excess surplus lines insurance without physically leaving the stateb b) use trained & licensed surplus lines agents to assist the consumer c) gives the states control of eligibility standards for unauthorized insurers & the risks they insure d) All of the above Answer: d

What is the reason for unauthorized insurance process laws?

a) reduce the number of law suits brought back to Florida b) to subject certain insurers and persons to the jurisdiction of Florida Courts c) To bring some form of uniform order to the insurance process d) To allow unauthorized insurers a method of bringing more law suits to Florida Answer: b

The FSLSO is

a) regulatory office within the department of Financial Services b) an independent non profit assn responsible the collection of fees, taxes, and data which is then reported to and distributed to various agencies in Florida c) a regulatory office within the DFS d) a public for profit assn responsible for the approval of all authorized insurers Answer: b

The refusal to insure or renew a policy solely because of the geographical location of the risk is known as?

a) retention b) redlining c) leverage d) adverse selection Answer: b

Wayne is a licensed surplus lines agent and owns a surplus lines agent. Upon his death his daughter Crystal can be granted a 6 month temporary license if?

a) she assumes her fathers license by assignment b) Her other sister Debbie who is also employed by the agency and also holds a surplus lines license does not want the job c) She obtains a bond of $25,000 for the temporary nature of the license d) None of the above Answer: d

Which of the following acts made by an unauthorized insurer alien insurer or person representing or aiding such insurer constitutes an appointment by such insurer of the chief financial officer to be its true and lawful attorney upon whom may be served all lawful process in any action?

a) solicitation of applications for insurance contracts in this state b) Issuance of insurance contracts to residents of this state c) collection of premiums for insurance contracts for corporations authorized to do business in this state d) All of the above Answer: d pg. 28

If the ABC Insurance co is determined to be insolvent or unsound financially what may the DFC take?

a) the Department may send a letter asking insurer to voluntary cease doing business in the state b)The department may withdrawal the eligibility of the insurer to insure surplus lines risk in this state c) the department may allow the insurer 30 days to re-establish financial solvency d) Department is prohibited from taking any action against a surplus lines insurer Answer: b

Which of the following must be placed on a surplus lines contract?

a) the Name, address, and license # of both the surplus lines agent and originating agent b) Notice that there's no protection by the Florida Guaranty Fund c) Both A & B are correct d) Neither A or B is correct Answer: c

Which of the following must be done for an unauthorized insurer to become an eligible surplus lines insurer in Florida?

a) the insurer must be domiciled in Florida b) needs capital and surplus equal to 50% of that required for authorized insurers c) Surplus lines must be invested in publicly traded Florida corporations d) Eligibility must be requested by a licensed surplus lines agent Answer: d

All of the following are reasons to export except?

a) the premium rate exported must be lower than that currently used by an authorized insurer b) the full amount of insurance is not procurable from authorized insurers c) the policy form shall not be more favorable to the insured than that used by authorized insurer d) all of the above Answer: a

For what reason are association plans NOT exempt from state insurance regulation?

a) they must be fully insured b) an employee and employer relationship must exist c) they have a charter and bi-laws d) All of the above Answer

Which is not a functional area of traditional surplus lines insurers?

a) underwriting b) accounting c) legal counsel d) management information system ( MIS) Answer: c

Which is not a functional area of traditional surplus lines insurers?

a) underwriting b) accounting c) legal counsel d) management information system MIS Answer: c

What is the most you can charge for a policy fee on Surplus?

$35

Any insurer that fails to file in a timely manner is subject to the following fines?

$500 per day to both foreign and alien insurers

If the Federal Government puts on an airshow in Florida what tax code are they?

0 - taxable

What is the maximum service/stamping fee allowed?

0.3% and/or .003 maximum and is currently 0.1%

What is the primary function of the FSLSO?

1) Promote and permit orderly access to surplus lines insurance in Florida 2) Enhance the number and types of insurance products available to consumers 3) Provide a source of advice and counsel for the benefit of consumers, surplus lines agents, insurers and government agencies concerning the Florida surplus lines marketplace. 4) Protect the revenues of the State of Florida

The classes under 627.062(3) may be exported under the following conditions?

1) the insurance must be placed only by or through a surplus lines agent licensed in Florida 2) The insurer must be made eligible under 626.918 3) The insured must sign a disclosure that substantially provides the following information. "You are agreeing to place coverage in the surplus lines market. Superior coverage may be available in the admitted market and at a lesser cost.

How much capital does a foreign insurer have to put up to operate in Florida?

15 Million Capital

How many members on the Board of Governors?

9

What is an alien insurer?

An insurer domiciled in a country other than the U.S. may become eligible to write surplus lines coverage in Florida as an alien insurer

What is a foreign insurer

An insurer domiciled in the U.S. but outside of Florida may become eligible to transact surplus lines business in Florida.

What is an eligible surplus lines insurer?

An unauthorized insurer that has been made eligible by the Florida Office of Insurance Regulation to write certain property and casualty lines of coverages with applicable capital and trust funds.

How to verify if a carrier is eligible to sell surplus?

DFS list. Also there is a list for Federal Alien carriers that is updated quarterly

What are the three types of risk under surplus

Distressed high-capacity risks unique risks

What is Facultative as it pertains to Reinsurance

Each policy or risk is separately negotiated between the ceding insurer nd the reinsurer

Surplus Agents must file affidavit when and what are penalties for late filings?

Each surplus lines agent that has transacted business during a calendar quarter shall, on or before the 45th day following the end of the calendar quarter with the Florida Surplus Lines Service Office including all surplus lines transacted. If late penalty is $50/day

Trust Fund Requirements?

Lloyds of London and the Institute of London Underwriters are both obligated to establish a trust fund of at least $100 million plus the trust fund requirement of $5.4 million.

Is there an advantage to the insured that procures their own insurance through and IPC (Independently Procured Business)?

No. They will pay the same tax rate as the surplus lines agent and the IPC will be responsible for paying the taxes

Surplus tax is also known as

Premium Receipt Tax

Pro Rata as it pertains to reinsurance?

Premiums and losses are shared proportionately between the ceding insurer and the reinsurer

Under the two types of reinsurance mentioned above, there are multiple forms of reinsurance. The most common forms are?

Pro Rata and Excess

Excess as it pertains to reinsurance?

Recoveries are available when a given loss exceeds the ceding insurers agreed retention

Who is responsible for the DILIGENT EFFORT FORM?

The surplus agent...end of story!

one way of gaining access to the non-admitted market and provides safeguards to policyholders through regulation.

The surplus lines agent is

Who maintains the Quarterly Listing of Alien Insurers?

Under provisions of the NRRA and maintained by the National Association of Insurance

What is the timeline to submit premium-bearing transactions, taxable & non-taxable, placed with a non-admitted insurer must be submitted to FSLSO by?

Within 30 days from the effective date of the coverage

The quarterly report is required to be filed with the Department no later than/days subsequently to the close of the quarter?

a) 14 days b) 30 days c) 45 days d) 90 days Answer: c

Which state had the first paperless stamping office?

a) Florida b) New York c) California d) Texas Answer: a

To place with unauthorized company the insurance covering a subject of insurance resident located or to be performed in this state is known as?

a) diligent effort b) to export c) prohibited practices d) always in the best interest of the insured Answer: b

When surplus lines agents have not been involved in the placement of coverage they are prohibited from?

a) making courtesy filing b) collecting service fees c) collecting taxes d) completing a diligent effort form Answer: a

Surplus carriers are?

eligible non-admitted insurer

Can a 220 agent contact a surplus lines company directly?

no

Surplus lines insurance represents?

only a small segment of the overall property-liability market and is focused primarily on specialized risks.

What does surplus lines market supply.

provides property-casualty insurance coverage to consumers that the admitted market is unable or unwilling to provide. This includes not only exotic risks, but day to day risk that fall outside the underwriting guidelines of the admitted mkt

Surplus Tax Status Codes

0 = taxable 1 = non-taxable commercial aviation 2 = non-taxable governmental, state, county or municipalities 3 = non-taxable wet marine & transportation risks commercial 4 = non-taxable Citizens Property Insurance & Florida (FHCF) Hurricane Preparedness and Assistance (EMPA)

How much does an Alien Insurance company have to put up to operate in florida

15 Million Capital plus 5.4 Million Trust Fund

What is the billing cycle for taxes, fees, assessments and surcharges

4th Qtr invoices issue in January are due by Feb 14th 1st Qtr invoices issued in April are due by May 15th 2nd Qtr invoices issued in July are due by August 14th 3rd Qtr invoices issued in October are due by November 14th

In Florida as a licensed 120 what are you?

Florida Surplus Lines Agents

Who was the first paperless office in the United States?

Florida in 19 FSLSO became the first paperless stamping office in the U.S.

Lloyds of London is surplus in all states except?

Kentucky, Illinois, & U.S. Virgin Islands. They are admitted in those states

What is Binding Authority?

Most surplus lines placements are open market placements, in that the insurer decides whether to accept the particular risk before it is bound. Over time, some surplus lines agents and surplus lines insurers establish close relationships. Those relationships can evolve into binding authorities.

What is the definition of DILIGENT EFFORT?

No market, no limit never for premium or anything having to do with finance 3 Declinations for everything other than Homeowner's 1 Declination for Commercial/Personal homeowners over 1 million Must maintain the Diligent Effort form in the file.

What are non-admitted insurers

Non-admitted insurers are able to offer a creative response to insurance needs and supplement admitted insurance for risks not typically acceptable to admitted insurers.

What is Reinsurance?

Reinsurance is a contractual agreement between two insurers under which the insurer issuing the original policy, known as the CEDING INSURER transfers some or all of the primary insurer's loss exposures to another insurer(s), called the REINSURER. To be a reinsurer in the State of Florida you must put up 20Million Capital to the State

Can surplus providers write in their domicile state?

Surplus carriers cannot write in their own domicile state. i.e. if Carrier is domiciled in Florida they cannot write surplus in Florida

What is Treaty as it pertains to Reinsurance

The ceding insurer and the reinsurer enter into an agreement based on reinsuring whole line or book of business. i.e. they can't break up the business the Reinsurer must take all of the particular book of business

What is the underwriting cycle?

The cyclical pattern of insurance pricing in which a soft market, characterized by low rates and relaxed underwriting criteria, is followed by a hard market, with high rates and restrictive underwriting criteria an example of a hard market would be after Hurricane Andrew i.e. is it going to be primarily written on the standard market or the surplus market

What is the IID (International Insurer's Department

To collect and review information from non-admitted alien insurers about their financial condition, trust funds and deposits. They maintain a list of the alien insurers that meet it s standards. IID alien insurer standards include: 1) Capital and surplus requirements 2) Trust fund requirements 3) Submissions of biolographical affidavits from the directors and officers of the insurer 4) Annual filings of the insurer's audited financial statements. Minimum capital & surplus to operate in florida Capital of 15million plus a Trust fund 5.4million

What is a PROGRAM MANAGER?

a surplus lines intermediary that has created a specialized or niche program that suits a particular market. Program managers can be independently owned or part of a large organization. i.e. if I was a program manager(have binding authority) with a company for Aviation they'd have to come through me to get to that company for Aviation

Surplus lines agents are allowed to charge a policy fee of?

a) $25 b) $35 c) $50 d) never permitted Answer: b

Surplus lines agents who fail to pay taxes within the time required may be fined up to/per day for each day the failure to pay plus interest of on the delinquent tax at a rate of/

a) $50/6% b) $500/9% c) $50/9% d) $500/6% Answer: b

DFS & the OIR may enter into a cooperative reciprocal agreement with another state providing for the collection of a fee to fund the Clearinghouse which shall not exceed what amount of the gross premium on transactions processed by the Clearinghouse

a) 0.175% b) 0.15% c) 0.30% d) 0.5% Answer: c

How much is the premium receipt tax assessed on all taxable gross premiums charged for surplus lines insurance?

a) 0.5% b) 5.0% c) 10% d) 0.1% Answer: b

The FSLSO board of directors is comprised of __ members?

a) 5 b) 9 c) 12 d) 13 Answer: b

When is inland marine/motor truck cargo taxable?

a) Always b) never c) sometimes d) partially taxable Answer: b

Florida law states that various acts by unauthorized foreign insurers or alien insurers constitutes an appointment by such insurer of a certain person as its true and lawful attorney upon whom service of process may be made. This person is?

a) Chief Justice of the Florida Supreme Court b) Secretary of State c) any licensed surplus lines agent d) The Chief Financial Officer Answer: The Chief Financial Officer

The McCarren Ferguson Act makes 3 federal laws applicable to the business of an insurance. Which of the following act is NOT included?

a) National labor relations Act b) Merchant Marine Act c) Federal Trade Commission Act d) Fair labor Standards Act

Which of the following risks is exempt from a premium receipt tax & service fees

a) Wet Marine b) Aviation c) large city d) religious structures Answer: c

The concept of attempting to place business in the standard or voluntary market prior to involuntary or surplus market is known as?

a) diligent effort b) convention notice c) treaty agreement for reinsurance d) leverage ratio Answer: a

What 3 risks are typically written in the surplus lines market?

a) distressed /unique/high capacity b) distressed/unique/std lines c) distressed/high capacity/std lines d) distressed/std lines/unique Answer: a

A surplus lines license agents license may be revoked for which of the following reasons?

a) failure to comply with CE requirements b) The removal of files from the agents office without providing access to the DFS c) closure of agents office for a period of greater than 30 days d) all of the above Answer: d

How many rejections in the admitted market must be received before placing a surplus lines policy?

a) one b) two c) three d) five

Florida allows all the following risks to be placed in the surplus market except?

a) workmers comp b) railroad c) ocean marine d) aviation Answer: a

Foreign insurer (coming from another state) accepting premiums shall file within what timeline

before the end of the month following each calendar quarter with the Florida Surplus Lines Service Office

What is eligible for Export?

cannot be placed with standard insurers

Gross Premium Charged or Returned

including policy and/or inspection fees (excluding service fees, taxes and assessments).

Alien insurer (outside country) accepting premiums shall file within what timeline?

on or before June 30th of each year with the Florida Surplus Lines Service Office

Surplus lines tax is also known as?

premium receipts tax which is 5% of the gross premium charged unless specifically exempt

what is a Domestic Insurer

they are domiciled within the state they write

What 4 markets make up the structure of Lloyds of London?

a) Marine/Aviation/Ocean/Motor

A surplus lines agents license's may be revoked for which of the following reasons?

a) Failure to comply with CE requirements b) The removal of files from the agents office without providing access to the DFS c) closure of agents office for a period greater than 30 days d) All of the Above Answer: d

Annual financial statements are required to be on file with FL & NAIC by what date?

a) March 31st b) April 15th c) March 1st d) March 15th Answer: c

Which of the following risks are covered under 626.917 eligibility for export wet marine, transportation, & aviation risks?

a) Aircraft used to transport executives b) Ships used to carry passengers for a fee c) Personal pleasure boats d) Personal aircraft to transport family and friends without a fee Answer: b

All of the following statements are correct regarding surplus lines service fees except?

a) Aviation risks are subject to service fees but not premium receipts b) Insurance for Government agencies are exempt from service fees. c) Surplus lines agents may absorb the service fee rather than passing it on d) payment for services fees must be received by the FSLSO by the 25th day of the month following receipt of the fee invoice Answer: c

Eligibility to export conditions does not apply to what lines?

Wet marine, transportation, aviation, and classes of insurance subject to 627.062(3)

What line are you prohibited to sell under surplus?

Workmen's Comp on a Primary Workers Comp it must be written under an admitted carrier. However, excess W/C can be written under surplus

A Florida Surplus lines Insurer is required to have and maintain a surplus to policy holders not less than?

a) 2 Million b) 10 Million c) 5 Million d) 15 Million Answer: d

Which of the following statements best describes the continuing education requirements for surplus lines agents

a) 24 hours for newly licensed surplus lines agents b) 10 hours if the agent has over 6 years licensure in surplus lines in Florida c) no hours specifically but surplus lines agents must maintain continuing education on their general lines 220 d) 15 hours of CE limited to surplus lines topics only Answer: c Answer: c

It is the responsibility of the Surplus Lines agent to keep & maintain a full & accurate record of each Surplus Lines policy and all attachments for a period of ____ years?

a) 3 years b) 5 years c) 7 years d) indefinitely Answer 5

Quarter Affidavits require

a) 45 days after the close of the processing quarter b) unless no business has been transacted during the applicable period c) must be filed on the slip with FSLSO for transmission to the DFS d) All of the above are correct Answer: d Answer: a

Surplus lines information portal (SLIP) filings for all monetary surplus lines financial transactions will be acknowledged by the FSLSO?

a) 5 days b) 10 days c) 30 days d) instantaneously after the filing Answer: d