Montana Takes Back Surplus Lines Stamping Office Operations

Montana’s Department of Insurance is now handling the operations of the Surplus Lines Stamping Office, duties it assumed from the Montana Surplus Lines Agent’s Association. Under the change, the DOI will directly review and process surplus lines submissions, verify that agents are licensed, determine the applicable stamping fee owed, and send surplus lines agents tax statements.

MSLAA turned over operations of the Surplus Lines Stamping Office to the DOI on July 1 and terminated its contract with PRIM, which handled stamping office services for MSLAA.

Moving the function in-house will allow DOI “to better regulate the surplus lines industry, and monitor and address problems on a regular and ongoing basis,” said Jessica Rhoades, communications director for the Montana State Auditor’s office. She noted that since taking office, Commissioner Monica J. Lindeen has been focused on making the agency more efficient to better serve citizens.

In addition to efficiency, the agency took the action based on pending federal legislation, such as the recently introduced Nonadmitted and Reinsurance Reform Act, aimed at making access to the surplus lines market more efficient for consumers and the brokers and agents who assist them.

“Should federal legislation pass and this agency was required to take back these functions, the state of Montana would be ahead of the game and spared the expense of a new e-filing system,” Rhoades said.

According to MSLAA, which has served as the designated Surplus Lines Advisory Authority for the past 19 years, the Department notified MSLAA of its intention to bring the Stamping Office Operations in house in April 2009. Since that time, the MSLAA Board, Public Risk Insurance Management (PRIM) representatives and legal counsel have been in negotiations with the Department regarding the transition.

“Attempts were made to reach an agreement that would allow for a transition that would run through the end of the year; however, in spite of our mutual efforts we could not reach an acceptable agreement,” MSLAA said in a statement.

MSLAA was hoping to create a six- to nine-month transition period for handing over the operations that it believed would make processes smoother for all parties involved, but the association and DOI couldn’t agree on the appropriate compensation for that period, Bob Beskupiak, MSLAA executive director said. “We made every effort and the DOI tried hard as well, we just couldn’t come to an agreement on it,” he said.

MSLAA will continue as a nonprofit organization with the mission to serve surplus lines producers. “MSLAA remains a resource to surplus lines producers in regards to the surplus lines segment of the insurance industry; however, we simply will not be handling the Stamping Office operations for the State of Montana,” the association said.