It’s a misconception that continues to create risk across the insurance value chain: the idea that because surplus lines insurers doing business in the US (wherever domiciled) are “non-admitted,” they are also somehow “non-regulated.” This is a “non-truth” and recent regulatory developments in Florida provide a stark reminder of what’s at stake.
Florida, like other states, maintains strict statutory obligations for surplus lines insurers and agents, including timely and accurate premium reporting. Non-compliance can lead to serious consequences, up to and including removal from the state’s eligibility list for surplus lines transactions. Market participants will be aware of a recent notice involving several carriers referred to the Florida Office of Insurance Regulation due to reporting failures.
Where Things Can Go Wrong: Pitfalls of Poor Reporting
Surplus lines insurers must take proactive steps to prevent data-related shortcomings and incomplete or inaccessible information from the surplus lines insurer’s MGA partner’s creating regulatory risk.
This highlights a critical yet sometimes overlooked component of surplus lines compliance: carrier reliance on the operational integrity of their MGAs. When oversight is weak or incomplete, reporting slips. When reporting slips, compliance suffers, and regulators take notice.
Pro Global’s audit and advisory work has uncovered the same pattern: MGAs underestimating the importance of data quality and compliance reporting. Many are operating under outdated assumptions about the regulatory leeway in the surplus lines space. But while surplus lines carriers are not subject to the same rate and form filing requirements as admitted insurers, they are absolutely subject to financial, tax, and operational reporting obligations. And increasingly, regulators are holding carriers – and, by extension, their MGA partners – to account.
What “Good” Looks Like
Best-in-class MGA oversight is not just about contractual compliance. It’s about establishing clear governance structures, aligning data standards, conducting regular audits, and creating feedback loops that catch issues before they escalate.
If you’re a carrier working with MGAs in the surplus lines market, ask yourself:
- Do we have visibility into the quality and timeliness of our MGA reporting?
- Are we auditing data submissions for accuracy and consistency?
- Have we educated our MGAs about their regulatory obligations in each state they operate?
- Do our contracts and controls allow us to intervene when reporting standards slip?
A Shared Responsibility
Ultimately, the reputation of the surplus lines market depends on all players understanding and fulfilling their roles. Regulators are sharpening their focus, and the days of flying under the radar are behind us.
The audit experts at Pro Global here in the US and indeed globally are working with carriers and MGAs alike to ensure that their compliance infrastructure can stand up to increased scrutiny. Whether through advisory support, audit programs, or data reconciliation, the goal is the same: robust, reliable operations that protect carrier eligibility, agent trust, and market reputation.
Further reading: How Louisiana’s House Bill 672 Is Reshaping the MGA and TPA Landscape
Find out more about how we can support you: https://pro-global.com/specialists/robert-sherman/
Meet our expert
Name: Robert Sherman
Job title: US Head of Audit & Advisory
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