In the first two months of 2022, 36 brokers were hit with fines from the Texas Department of Insurance for failing to timely file surplus lines policies and related documents. Altogether the fines reached $303,876. All of the delinquent filings occurred in 2020. Some fines got a boost when TDI could point to prior delinquencies. Brokers signed consent orders in all cases.
Twenty five of the consent orders were finalized in January and 11 in February. Seven of the disciplinary orders were against Texas resident brokers; 29 were against nonresident licensees. Only one of the resident brokers is listed as a member of the Texas Surplus Lines Association on the TSLA website.
Fines are based on the number of filings made beyond the 60 day deadline as well as the number of days late. The mildest penalties, assessed as fees and expected to be paid by the broker from a TDI invoice, do not rise to a disciplinary order published on TDI’s website.
Fines levied by disciplinary order on Texas resident brokers, as of Feb. 28, ranged from $2,300 to $16,450, with disciplinary orders indicating that two of the fined brokers had filing delinquencies in prior years. The disciplinary order against Southern Star MGA in El Paso meted out the highest fine among resident brokers; however, the order does not mention any prior delinquencies.
Nonresidents made up 80 percent of the brokers fined; their fines made up 86 percent of the fines assessed, as of Feb. 28. Nonresident fines ranged from $550 to $100,000. The nonresident broker with the lowest fine may have avoided a disciplinary order altogether, as the order indicates the broker failed to pay the invoiced fee timely.
The disciplinary orders rarely provide details on the number of policies filed late or how late they were filed. However, two orders during the first two months of 2022 provide some of this information. Evolve Cyber Insurance Services, San Rafael, California, filed six policies late in 2020; Evolve was fined $2,150.
George Edward Wilson, Columbia, South Carolina, made 109 late filings, 16 of which were more than 365 days after the issue date on the filing. Wilson was fined $4,900.
Fewer fines for late filings were published as disciplinary orders last year, as filers transitioned to providing policy limit information, along with the customary policy information. Only eight brokers were disciplined in 2021 for late filings attributable to 2019, with total fines reaching $185,950. In comparison to the prior year, enforcement penalties meted out in 2020 for late filings were against 46 brokers, with fines totaling $382,950. The 2020 disciplinary orders covered late filings made in 2018 and some in 2019. The total of monetary fines does not include administrative fees assessed only by TDI invoice.
The Surplus Lines Stamping Office is required to provide TDI with a report on 2021’s late filers by April 1.