Florida Surplus Lines Service Office Gets Update on Clearinghouse Services Agreements
Sep 15, 2011
The Florida Surplus Lines Service Office (“FSLSO”) National Clearinghouse Committee (“Committee”) heard an update today, September 15, 2011, on the status of two pending service contracts to provide Clearinghouse services to the Nonadmitted Insurance Multi-State Agreement (“NIMA”) member states.
FSLSO Executive Director Gary Pullen related to the Committee that he spoke with Bruce Culpepper from the Florida Office of Insurance Regulation (“OIR”) and NIMA Vice Chairman and South Dakota Insurance Director Merle Scheiber last week, September 9, about the agreements via conference call. He explained that the FSLSO would be drawing up two contract agreements-one for the provision of Clearinghouse administrative services, and another to address software licensing.
Draft versions of both agreements should be completed by late next week and delivered to NIMA members for review, he said.
In addition, a first-year budget for the Clearinghouse has been developed and will be discussed during an FSLSO Budget Committee meeting on September 20, 2011, along with a possible amendment to this year’s budget, Mr. Pullen noted. The measures are necessary for the Clearinghouse to be operational in 2012.
The probability of meeting a November 15, 2011 Clearinghouse start-up date previously mentioned by NIMA states will depend on how long it takes to approve the agreements for administrative services and software licensing, he noted.
“I think that process is going to take a matter of three to four weeks at a minimum,” Mr. Pullen stated.
One Committee member wondered if South Dakota had discussed what type of information it wanted to capture through the Clearinghouse.
“No,” Mr. Pullen responded. “This is really about what services we will be providing as the Clearinghouse provider. We will be providing a disaster recovery plan and a remote data center. It’s more of those kinds of items or issues of what will be really included in the agreement itself.”
Another Committee member asked if the NIMA states had come to any agreement as to what would be classified as a “multi-state risk.”
Mr. Culpepper said he believes the definition of “multi-state risk” will be the same as it is described in the Nonadmitted Reinsurance and Reform Act, with “multi-state risk” defined as “occurring between two or more participating states.”
“I think several of the states, if not all the states, would like to use the Clearinghouse for all risks, whether they are NIMA risks, or single state risks, or risks between participating states and non-participating states,” Mr. Culpepper said. “I think that’s the ultimate goal.”
Mr. Pullen said the system is designed to accommodate such action.
Whether or not non-participating multi-state reports will be included in the Clearinghouse could significantly impact the budget, said one Committee member. Mr. Pullen said it is too soon to tell on that.
“What we really utilized was just sort of an estimate: That 10 percent of a state’s total surplus lines premium would be attributable to multi-state exposures,” Mr. Pullen explained.
It was explained that there will be one contract with NIMA and the NIMA states. However, some states have asked if the FSLSO could collect everything for them.
Such an arrangement could be achieved through an addendum to the original agreement, Mr. Pullen stated. The addendum would identify states that would like the Clearinghouse to provide for their single-state risks as well as their multi-state risks.
“We will basically receive additional revenue from the additional premium that is reported on behalf of those states on a single state basis,” Mr. Pullen added.
With no further business before the Committee, the meeting was adjourned.
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