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Rules
RULE 1
SURPLUS LINE ASSOCIATION OFFICE & MANAGER
The Board of Directors will employ a Manager who will be responsible for the management of the Surplus Line Association Office.
The Association Office under the direction of the Manager will examine all filings (see filing procedures, Rule 4) and prepare an annual statement of premium tax owed by each member and/or broker on their monthly reports (January through December).
The Manager will serve as liaison with the Office of Insurance Commissioner, Colorado State Insurance industry organizations, NAIC, and other Surplus Line organizations. The Manager will monitor legislative activity for matters pertaining to Surplus Lines.
RULE 2
RESPONSIBILITY OF SURPLUS LINE BROKER
Nothing in the By-laws and no action or inaction of this Association, the Manager or the Association office shall relieve any member and/or broker of responsibility to comply with the law. Each and every member and/or broker shall indemnify and hold harmless the Association, its Board of Directors, Manager and employees from and against any liability that may arise by reason of any member's and/or broker's failure to comply with or violation of any law.
RULE 3
REGISTRATION OF MONTHLY FILING PROCEDURES
Association staff will be instructed to verify the following four items on each monthly filing. Upon verification of each of the following items, the report and affidavit shall be registered and filed at the Association office. It shall not be implied or assumed by the members, licensed surplus line brokers, or anyone else that the registration of the monthly filing signifies anything more or less than that the monthly filing has been verified as follows:
1. Mathematical accuracy of tax calculations: The mathematical accuracy of the tax calculation shall be checked by verifying that the tax indicated is the arithmetically correct result of multiplying the tax rate times the premium and policy/inspection fee reported.
2. Minimum security check: A check will be made to determine if the security (company) used on each risk is on the current list of Approved Non-Admitted Carriers. This minimum security check does not assure the broker that the requirements of %10-5-105(2) have been complied with. Compliance with that statue is the responsibility of the broker, not the Association.
3. Affidavit completed and signed: Staff will verify that the broker has completed and signed the monthly affidavit.
4. Arithmetical accuracy of percentage allocation on multiple security risks: The security on individual risks must always equal 100%. If filing a placement with multiple securities (companies), the insurers and that percentage must be shown. For example, the monthly report should show:
Underwriters at Lloyds, London 20%
Company "A" 60%
Company "B" 10%
Company "C" 10%
RULE 4
MONTHLY FILING PROCEDURE
All surplus line insurance coverages written by members of the Association as well as all licensed surplus line brokers, on Colorado risks are to be submitted to the Association office for examination.
The following rules authorized by 10-5-103, 10-5-115 C.R.S. and Regulation 2-4-1 shall apply to all such submissions:
1. All submissions must be filed on forms prescribed by the Association.
2. A report must be filed and signed by the Surplus Line Licensee even for months when no premium is written. See page 4c for prescribed reporting form.
3. Itemization of premium, taxes and fee(s): Each filing involving premium must include the following itemized charges:
Premium
Policy fee and/or inspection fee (if charged)
State tax - Refer to Rule 6
Surplus line examination fee - Refer to Rule 5
A. All of the above items shall be charged to the Insured.
B. State tax is based on all premium and fee(s),including
but not limited to policy and/or inspection fee.
4. Filing of reports and receipt thereof is the same as filing with the Colorado Division of Insurance.
5. Colorado surplus lines premium tax:
A. Applies to all premium and policy/inspection fees.
B. Monthly reports will be filed with the Association office
on or before the 15th of the month following the
reporting month, i.e., January report is due on the
15th of February. These reports must be filed on
forms approved by the Division of Insurance and the
Surplus Line Association. See pages 4a and 4b for
samples of approved forms.
C. After the December report is received, the Association
office will render an annual tax statement showing the
broker's tax liability for that year.
D. Each broker will pay the premium tax directly to the
Colorado Division of Insurance.
6. Surplus Lines examination fee:
A. Examination fees apply to premium only.
B. Examination fees will be remitted to the Association
office along with the monthly report. Checks are to
be made payable to: Surplus Line Association of
Colorado, Inc.
7. All documents submitted shall be confidential information to the Association office, and shall not be divulged to, or be open to inspection by, any third party, except the insurance Commissioner or other Governmental Agency having legal authority therefore.
RULE 5
EXAMINATION FEES
The Association charges an Examination Fee of not more than one percent of premiums charged, as provided by %10-5-115(8)(A) of the Colorado Insurance Code. Examination fees are due and payable with each monthly report. Checks are to be made payable to: Surplus Line Association of Colorado, Inc.
Effective April 1, 1986, the Examination Fee charged is 2/10 of 1% (.002).
RULE 6
PREMIUM TAX - ANNUAL FILING STATE OF COLORADO
Upon receipt of each broker's December report, of any year, the Surplus Line Association will provide each Broker, from Association records, an annual statement of all premium written, policy/inspection fees (if charged) and tax owed. This information will be provided in order to assist the broker in making the required annual tax return due no later than March 1 to avoid tax penalties (%10-5-111) and (%10-5-112) taxes are due and payable March 1 and delinquent after March 31.
Tax rate - 3%
RULE 7
ENDORSEMENT OF CONTRACT
As provided by %10-5-104, every insurance contract procured and delivered as a surplus line coverage shall be initialed by or bear the name of the surplus line broker who procured it and shall have stamped upon it the following:
"This contract is delivered as a surplus line coverage under the 'Non-admitted Insurance Act.' The insurer issuing this contract is not licensed in Colorado but is an approved non-admitted insurer. There is no protection under the provision of the Colorado Insurance Guaranty Association Act."
The following stamp must also be on any Claims Made policy:
"This policy is a claims-made policy which provides liability coverage only if a claim is made during the policy period or any applicable extended reporting period."
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