Comments from the Executive Director
Carbonized Tap
We have been asked for some time to consider using some type of carbonized tag form, so that response to the tag can be written only once and a copy kept for the member's records. We have experimented with use of such a form and have concluded that it is just not practical. The use of carbonized forms would require additional personnel and a minimum of 7000 extra sheets of paper a month. The Data Processing Department, managed by Judith Flowers, has been involved in this experiment and we have collected a series of comments which are available to any member for review.
Judith says, "The best way is to educate brokers when necessary and assist them in eliminating the problems that create the tag situation in the first place. If there are only a few tag items going out to the brokers, it should be no problem. to make a photocopy of their reply to us. If there are a large number of tags we should make every effort to get the problem resolved by educating that broker on how filings should be done."
For that reason the SLA now has Nadine Watso as our Education Coordinator. Nadine has many years of experience on filing and tagging and should be contacted for assistance in establishing internal procedures to avoid tags in the first place. Nadine has had meetings with a number of brokers whose tagging "rates" are high and is working to establish better procedures. If you are having problems with tags or would like to improve your. procedures or need any further information, contact Nadine Watso and/or Judith Flowers at (415) 434-4900 or (800) 334-0491.
Prior Assistance with Company Filings
As everyone can appreciate, the SLA walks a somewhat fine line between what the DOI expects us to do or has instructed us to do in our approved Plan of Operation, and what we want to do for our members and promoting a stable, financially secure and responsive market. The SI~A serves the surplus line broker community and it acts as the agent of the DOI to help regulate the surplus line market. As a result, it is important for the SLA to be clear about it's role when engaging in activities where these functions may appear to overlap.
1. PRIOR TO FILING The SLA wants to proactively help brokers with their company submissions, identifying possible problems that might delay the formal review process before they occur and reduce requests for additional information. We want California to have a robust and solvent surplus line market and in that regard we want to help brokers adequately document a proposed carrier's sound financial condition.
This year, we have provided some submitting brokers with a general overview of common filing problems and on occasion a brief review of a carrier's financial statements prior to formal submission in order to identify possible gaps in documentation. These are relatively informal procedures and there is no guarantee that upon full review of the documents submitted that there will not be questions raised, nor requests for additional information during our or the DOI's formal review process. The individual issues raised when reviewing the financial solvency of any carrier are unique to the circumstances of that carrier's. So, a general overview cannot identify all possible problems--thoug4 we desire to do so.
It is important that submitting brokers understand that following our recommendations regarding their submission is no guarantee regarding the process or the eventual outcome. Our recommendations only represent what we believe is prudent at the time, given our overview.
2. AFTER FILING Once a submitting broker files on behalf of a carrier with the DOI, and the DOI instructs the SLA to review the carrier under the Plan of Operation, we must follow the procedures required by the DOI, acting as an agent of the DOI. During the formal review process, all submitting brokers are treated equally and no further informal communication regarding the carriers financial condition take place. This is to protect the integrity of the submitting broker, the DOI and the SLA.
3. REQUESTS FOR ADDITIONAL INFORMATION Requests for additional information made by us or the DOI during the formal process are an opportunity for the broker to provide information that adequately demonstrates the financial solvency of the carrier and its compliance with applicable California requirements. Occasionally, additional materials submitted may raise more questions. However, the best result of such inquiries is that the broker promptly satisfies any and all concerns about the carrier's financial condition and/or compliance with California requirements.
If brokers have questions regarding our requests, they are free to contact us and we arc happy to address their concerns. However, at this point, these conversations are a part of the formal review process and thus we are more limited in what we can say (e.g., we cannot say anything that as the agent of the DOI may compromise the review process, such as by giving our opinion regarding the DOI's likely actions).
As you can see from these two topics, there's a lot more going on in the SLA than issuing bulletins and tags. I'd be interested in whether or not the members feel a Letters to the Editor part of this newsletter would be helpful or of interest. It is important that we hear from members about their concerns. Let me know what you would like to see the SLA do for the industry.