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Surplus Lines

Procedures for Placing Surplus Lines Business

NORTH CAROLINA INSTRUCTIONS AND REQUIREMENTS FOR OBTAINING A LICENSE TO REPRESENT A SURPLUS LINES COMPANY AND THE PROCEDURE TO BE USED FOR PLACING BUSINESS

Under the provisions of Article 21 of Chapter 58 of the General Statutes of North Carolina, a license may be obtained from the North Carolina Department of Insurance to place or procure policies of insurance on risks resident, located or to be performed in North Carolina from surplus lines insurers. As a condition precedent to the placement of such insurance, the licensee must exhaust the market for such coverage in companies that are admitted to do business in North Carolina, and may place with surplus lines insurers only that portion of the business that admitted companies will not take. In addition, he or she must comply with the following requirements:

  1. Complete and submit to the Agent Services Division of the North Carolina Department of Insurance "Application for License to Represent a Surplus Lines Insurer." Current Application (Form SL)
  2. Pay an annual license fee of $50.00
  3. Keep a record of all business placed with such surplus lines insurers in accordance with General Statute 58-21-75.
  4. Stamp or write in contrasting color and 12-point type or in 12-point type and underlined and in bold print on the first page and on the filing face of the policy so issued the words: The insurance company with which this coverage has been placed is not licensed by the State of North Carolina and is not subject to its supervision. In the event of the insolvency of the insurance company, losses under this policy will not be paid by any State insurance guaranty or solvency fund."

On January 1, 2000, the Department went to an electronic form of submission. Licensed Resident Surplus Lines Agents now submit all Form F's and modifications via a web-based system by logging directly into the database and inputting the information. All Form F's still go through a review process and are approved or disapproved by the Surplus Lines Coordinator of the North Carolina Department of Insurance. These procedures are explained below in further detail.

Licensed Non-Resident Surplus Lines Agents are required to go through either a licensed Resident Surplus Lines Agent or a regulatory support organization (which is the North Carolina Surplus Lines Association (NCSLA)).

FORM F

NC Resident Surplus Lines Agents Filing Information

It is necessary for each surplus lines licensee to make application to the Commissioner of Insurance on Form F for permission to place each separate risk. This form must be signed by the insured and filed either electronically or manually by the licensee with this Department within 30 days after the placing of any surplus lines insurance. These records must be maintained by the licensed surplus lines agent for a period of 5 years.

Obtaining a Copy of the Form F

The hard copy of the Form F IS NOT furnished by the Insurance Department. Effective April 1, 2001, hard copies of Form F's MUST be printed in BOLD where the CONTRASTING COLOR was previously required. Form F's may be obtained from the North Carolina Department of Insurance website at www.ncdoi.com or from the North Carolina Surplus Lines Association’s website at www.ncsla.com. (See information below.)

The contact person for the NCSLA is Mrs. Susie Allen. She may be reached by phone at (919) 562-7917 or (919) 274-8406, or by email at susie@ncsla.com.  The mailing address is: Post Office Box 730, Wake Forest, NC 27588.

Filing the Form F

The current procedure for filing Form F's with the Department is via electronic transmission directly into the Department's database. This is done by obtaining a user ID and password from the Department and logging into the following URL: sls.ncdoi.net

From there, the user will be able to pull up the electronic Form F, complete it and submit it to the Department. Immediately upon submission to the Department, the user receives an electronic confirmation from the Department of receipt of the Form F along with a unique identifier ("sl" number). The Form F's are then approved by the Surplus Lines Coordinator. Immediately upon approval, the user can go into the "Summary" screen and view a list of the Form F's that have been approved for their agency. This summary screen is in live time, so the user can view current information regarding the status of their Form F submissions. If a form is disapproved, the user will have a notification on the home page when they log in to the surplus lines system. The user simply clicks on the disapproval notification, modifies the Form F and resubmits it to NCDOI.

The approved Form F's can be modified at any time prior to the date that the NCDOI generates the monthly bill. The user simply has to pull up the Form F, modify it and resubmit it for approval. All modifications of Form F's go through the same process as the new submissions.

Non Resident Surplus Lines Agents

The current procedure for filing Form F’s is that you must go through either a Resident Surplus Lines Agent or a regulatory support organization (which is the North Carolina Surplus Lines Association (NCSLA)). The NCSLA Tax Filing Requirements can be downloaded from their website at www.ncsla.com and clicking on Form F under the main menu.

FORM E-1

Resident Surplus Lines Agents

Additional/Return/Cancellation premium modifications

The Form E-1 is also a part of the electronic filing system for surplus lines. The E-1 screen is used for submitting additional premiums, return premiums, and cancellation premiums that are not associated with current quarter Form F's. In other words, if taxes for a Form F have been paid in a prior quarter, the user will need to go into the E-1 screen and make any modifications. The "Summary" screen keeps a list of all E-1 modifications made in a quarter and it is updated instantly.

Non Resident Surplus Lines Agents

Additional/Return/Cancellation premium modifications

You will need to contact Mrs. Susie Allen at the NCSLA at (919) 562-7917 for what is required to file additional/return/cancellation premium modifications.

FORM E TAX BILL

Resident Surplus Lines Agents

The Form E tax bill is generated electronically and can be obtained from the Welcome Screen upon logging in the Surplus Lines database. The electronic bill is generated the first of the month following the close of the quarter. The electronic bill shows the following information:

  • number of Form F's Approved
  • amount of premium
  • amount of additional/return/cancellation premium (adjustments)
  • total premium
  • 5% premium of tax due

Each agency can retrieve the tax bill when they log into the Surplus Lines database. The bill must be printed out and signed by the licensed surplus lines agent, notarized and mailed along with a check for the premium tax to the North Carolina Department of Insurance. This must be done within 30 days of the last day of the quarter.

Important note: If you do not write any business for the quarter, you will still need to submit a signed, notorized copy of the electronic bill within 30 days of the last day of the quarter. There are NO Exceptions.

Non Resident Surplus Lines Agents

YOU WILL NOT RECEIVE A FORM E TAX BILL. Any surplus lines business placed will be submitted to either a Resident Surplus Lines Agent or a regulatory support organization to file on your behalf. If you have not placed any surplus lines business there is nothing for you to report. The resident surplus lines agent/regulatory support organization will be billed for any business that they submit on your behalf.

FOR ADDITIONAL INFORMATION ON SURPLUS LINES REGULATION IN NORTH CAROLINA, PLEASE CONTACT THE NORTH CAROLINA DEPARTMENT OF INSURANCE, PROPERTY AND CASUALTY DIVISION @ (919) 807-6075.