Industry Issues | Surplus Lines Reform

Iowa Insurance Division Issues Liquor Liability Examination Request

PCI has received numerous inquiries from PCI members regarding a January 2, 2018, Iowa Insurance Division notice to "carriers writing other liability in Iowa." According to the Division's Actuarial Administrator, the "Iowa Insurance Division is conducting an examination of the Liquor Liability ("Dram Shop") line of business in the State of Iowa pursuant to Iowa Code chapter 507."

PCI met with the Division to raise concerns about the cited statutory authority, the rating information requested, and the time frame for response. The Division confirmed that due to their understanding that surplus lines insurers are a key writer of liquor liability insurance in Iowa, surplus lines companies are being subjected to this "liquor liability data request."

IID Chief Examiner Kim Cross additionally provided PCI with the following written response to be shared with our members.

It was a pleasure to visit with you [Hilary Segura] and David Kodama this afternoon.  As we discussed, we have been tasked with a project to better understand the Iowa liquor liability marketplace with a completion date by January 31, 2018.   Regrettably, our deadline has driven the window within which we have asked companies to respond.

The request for information was forwarded to all companies that reported at least $10,000 in "Other Liability" written premium as of December 31, 2016, including surplus lines insurers.  All types of insurers who report "Other Liability" data  on Schedule P of the Annual Statement, with the exception of reinsurers, are requested to respond to this data inquiry. 

The IID understands that surplus insurers are not subject to the IID's examination authority and that they do not file base rates.  We understand the potential confusion that may have arisen by reference in our cover letter to Iowa Code chapter 507.  This reference was simply an effort to assure insurers that the IID has the statutory ability to protect the confidentiality of company specific data.  As an alternative for surplus lines insurers, the IID can maintain the confidentiality of company specific data pursuant to Iowa Code section 505.8(8). 

Additionally, in an effort to ease the reporting burden, the IID offers all insurers the following:

  • companies may report on a group or individual basis.  If a group basis is elected, companies are asked to identify all insurers by their respective NAIC numbers;
  • surplus lines companies and other companies that do not file rates need not complete the base rate section of the spreadsheet (sections 3-5);
  • any individual company or group with less than $10,000 of Iowa "Other Liability" written premium for 2016 need not report;
  • if Iowa liquor liability written premium was less than $1,000 in 2016, then there is no need to complete the base rates and triangles on the spreadsheet (sections 3-8);
  • if 2017 data is not available, please note on the response and provide data through 2016; and
  • clarification that the written premium for spreadsheet section 8 are to be in thousands.

Ramona Lee and I appreciate this opportunity to clarify our intent and objectives.  We greatly appreciate your offer to share this information with your membership.  Please let us know if you or your membership have additional questions or concerns.  

Iowa DOI Revises Annual Surplus Lines Filing Requirements

This is a belated broadcast on revisions made to the Iowa Division of Insurance filing requirements for registration as a qualified surplus lines insurer, effective January 1, 2017. PCI learned that notices were emailed to registered surplus lines insurers in November, 2016. (attachment-1) That notification stated that the Iowa Insurance Division has implemented and mandated OPTins (Online Premium Tax for Insurance) for submission of Surplus Lines company renewal registrations. This includes facilitation of the payment of registration renewal fees along with submission of the renewal form. (attachment-2)

See also -

If notice was not received by the correct person at your company, you are instructed to notify the DOI office by email to In subsequent years, notification will be emailed when the registration renewal form is available for download on the OPTins website.

PCI is still working with the Division to clarify if there is a different form for purposes of an insurer's initial registration as a qualified surplus lines insurer.

Finally, please note that the annual filing requirement checklist for surplus lines insurers has been updated, effective January 1, 2017. In addition to the renewal form noted above, a signed jurat page is required to be filed by 3/1, and electronically by 5/15, 8/15, and 11/15. 

*** A detailed listing of direct premiums written in Iowa is NO longer required to be filed ***

Annual Statement Filing Instructions Checklist and Due Dates (see State Required Filings section)

Iowa HSB 151 Introduced to Establish Requirements for Domestic Surplus Lines Insurers

Iowa House Study Bill 151 has been introduced, an act relating to requirements for domestic surplus lines insurers. Iowa is the third state this year to introduce DSLI legislation. HSB 151 is based on template legislation drafted by PCI. 

According to the bill, this legislation would establish requirements for domestic surplus lines insurers in the state.

A "domestic surplus lines insurer" is a nonadmitted insurer that is domiciled in this state with which a surplus lines insurance producer may place surplus lines insurance. The bill specifies requirements that a nonadmitted insurer domiciled in this state must meet to be considered a domestic surplus lines insurer.

A domestic surplus lines insurer is considered a nonadmitted insurer as that term is used in the federal Nonadmitted and Reinsurance Reform Act of 2010. A domestic surplus lines insurer is deemed to be an eligible surplus lines insurer and is subject to any requirements of Code chapter 515I that are applicable to an eligible surplus lines insurer. A domestic surplus lines insurer is authorized to write any kind of insurance that a nonadmitted insurer not domiciled in this state can write, which refers to any of the types of insurance required to be reported in the annual statement filed with the commissioner of insurance by an admitted insurer.

Notwithstanding any other provision of law to the contrary, a policy or contract issued in this state by a domestic surplus lines insurer is subject to the same taxes as are assessed on a policy or contract issued by a nonadmitted insurer, including the premium tax on surplus lines insurance, but is not subject to other taxes levied on an admitted insurer, whether domestic or foreign. A policy or contract issued by a domestic surplus lines insurer is not subject to the jurisdiction of the Iowa insurance guaranty association pursuant to Code chapter 515B or the Iowa life and health insurance guaranty association pursuant to Code chapter 508C.

All financial and solvency requirements imposed in this state upon a domestic admitted insurer are applicable to a domestic surplus lines insurer unless a domestic surplus lines insurer is specifically exempted from such requirements. The bill exempts a policy or contract issued by a domestic surplus lines insurer from all requirements imposed in this state relating to insurance rating plans, policy or contract forms, policy or contract cancellation and nonrenewal, and premiums charged to the insured in the same manner and to the same extent as a policy or contract issued by a nonadmitted insurer domiciled in another state.

Iowa Enacts HB 2145, Surplus Lines Insurance

Iowa's Governor Branstad signed into law House File 2145 on March 29, 2012. This legislation establishes regulations to permit access to surplus lines insurance in Iowa, and provides civil and criminal penalties, coordinating provisions, and repeals, and includes effective date provisions. HF 2145 takes effect upon enactment.

Highlighted Provisions:
HF 2145 creates new Code chapter 515I and repeals sections 515.120 through 515.122.

Section 515I.2 adds terms and definitions to comply with the federal Nonadmitted and Reinsurance Reform Act of 2010, Title V, subtitle B, of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act.

Section 515I.3 sets criteria for placement of surplus lines insurance business with nonadmitted insurers.

Section 515I.4 establishes the requirements for eligible surplus lines insurers, when Iowa is the home state of the insured.

Section 515I.9 sets the requirements for "exempt commercial purchasers."

Section 515I.11 and 515I.12 provides for violations and penalties subject to surplus lines insurers. These provisions continue to raise concern, especially in light of the NRRA. PCI will closely monitor how these sections are implemented in regulation.

Code section 432.1 is amended to provide that for surplus lines insurance, the tax on premiums are calculated on the amount of premiums written on such insurance policies where the home state of the insured is Iowa.

PCI Emphasizes Concerns Regarding Iowa Surplus Lines Market Conduct Exam

PCI met with Iowa Commissioner Susan Voss recently regarding market conduct examinations of surplus lines insurers. The commissioner received copy of the legal opinion that was sent to the Governor's office that puts to question the Division's statutory authority to conduct such examinations.

PCI emphasized the concerns of PCI members regarding the depth and breath of the exams, and the fact that this action by the division is essentially unprecedented. PCI noted that the cost in some instances has not been unsubstantial, with one company reporting fees nearing 10% of its written premiums in the state.

PCI requested the Division cease these examinations of surplus lines insurers and that any billed exam-related expenses be waived.

Assistant Commissioner Rosanne Mead noted she received some calls from companies about the exam. Commissioner Voss concluded by saying the exams are "done" and, that any company with questions regarding the exam and/or cost should contact her directly.

PCI Addresses Iowa Surplus Lines Insurer Exams

PCI met with several members of Iowa Governor Branstad's staff to discuss a number of issues pending in Iowa, including the dram shop issue and the Iowa Insurance Division's examination of surplus lines companies. Attached please find a copy of our follow-up letter and related attachments sent to the governor's staff.

In the attached PCI correspondence sent to the governor's office:
"PCI respectfully asserts that the Iowa Insurance Division’s current examination of surplus lines companies writing in the state is unwarranted as a practical matter since these companies do not have much of the information that is being sought. In addition, the exam process is extremely costly and creating an unwelcome business environment. Lastly, the federal law does not appear to support a state’s authority to conduct this type of exam."

PCI has commissioned a legal analysis with an Iowa law firm on the authority of the division to conduct the exams, with specific attention to the effects of the federal law under the nonadmitted and reinsurance reform act. While we cannot give our companies legal advice, we intend to share the results of that legal research which will be discussed on our December Committee teleconference call.

PCI Expresses Concerns Over Iowa's Surplus Lines Insurer Exams

In a letter sent to Iowa Commissioner Susan Voss, PCI expressed strong concerns with the division's market conduct exams of foreign surplus lines companies. PCI is also reaching out to the governor's administration to arrange a meeting to discuss several issues of concern to PCI members, including surplus issues - both the filed NRRA legislation and these market conduct exams.

NAPSLO and AIA have also submitted letters of objection to these unprecedented examinations. NAMIC is expected to likewise send a letter this week.