Ballinger Describes Texas Stamping Office Operations to AAMGA University

Structural similarities and differences between stamping and service offices in the 15 stamping offices across the U.S. and how their markets differ were discussed by Phil Ballinger, executive director of the Surplus Lines Stamping Office of Texas, during a presentation to the 9th annual meeting of the American Association of Managing General Agents in Orlando, Fla.

Ballinger’s presentation was one of four given to AAMGA University students in Orlando sessions. Other stamping bureaus’ activities were described by Larry C. Boyd, executive director of the Surplus Line Association of Oregon; Daniel F. Maher Jr., executive director of the Excess Line Association of New York; and David L. Ocasek, executive director of the Surplus Line Association of Illinois.

The National Association of Professional Surplus Lines Offices and AAMGA support the creation and operation of state stamping offices because they offer a form of efficient self-regulation, which benefits consumers through an innovative and resourceful excess and surplus line marketplace.

The associations maintain that the following points characterize the ideal characteristics of stamping offices: Governance, compliance and self-regulation, solvency, advo-cacy, education, service and information, electronic filing procedures and taxation of multi-state risks.

In 1994, NAPSLO and AAMGA published a position paper in support of the contributions and services provided to the surplus lines community by state stamping offices. They said the excess and surplus community serves insureds who cannot obtain property and casualty insurance due to unique insurance needs or risk characteristics, and the specialty licensed excess/surplus line brokers fulfill these insurance needs by placing such risks with eligible non-admitted insurers.

“The key role of a stamping office is to promote a reputable, efficient and financially strong surplus lines market,” Ballinger, who has worked at the Stamping Office in Austin since 1992, explained. “Typical functions are to receive regulatory filings, including diligent search, affidavits and other filing forms, policies and policy data.”

He said this role includes analysis, compliance, record keeping and statistical reporting of agencies, insurers and coverages.

Ballinger emphasized that education was a key function of stamping offices and said that three states are most heavily into education–California, Florida and New York, all of which have very good Web sites.

Altogether there are stamping offices in Arizona, California, Colorado, Florida, Idaho, Illinois, Mississippi, Montana, Nevada, New York, Oregon, Pennsylvania, Texas, Utah and Washington.

Typical educational functions include seminars and training–most often for CE credits, Web sites and publications. Ballinger displayed examples of recently published training materials, bulletins and newsletters. He said other typical functions include market assistance and help with fraud detection.

Ballinger gave detailed examples of benefits of the operation of stamping offices, emphasizing that they play a key role between industry and state regulators. He said it was important to foster an environment of heightened concern for compliance. It is important, he said, to make sure agents and consumers have an enhanced knowledge of the law through educational programs and to avoid the hazards of unauthorized insurance.

“Stamping offices must maintain their credibility and walk on both sides of the street, maintaining impartiality when in between state regulatory agencies and the insurance industry,” Ballinger explained. He noted that publications sponsored by the stamping office reinforce knowledge and clarify compliance issues.

“We received thousands of policies on paper last year,” Ballinger said. “In the old days such policies were brought into the office by ox cart. In 2003, 30 percent of the policies came in electronically, and we hope the number will increase as technology becomes more available.”

Ballinger said that increasingly, regulatory filings made electronically will eliminate inefficient and costly paper submissions.

He said that networking stamping offices, the insurance industry and regulators will foster a broader perspective on insurance issues and practices. He pointed out that stamping office programs operate at no expense to the state, as stamping fees are not state revenue.