Staying on top of state filings can be tricky. Demanding regulators, detailed filing requirements that vary by state and mountains of required supporting documentation can quickly become overwhelming, even for insurance companies with robust in-house filing departments.
Objections or disapprovals from Departments of Insurance (DOIs) can and do happen, but there are some things you can do to mitigate that risk. Though it is impossible to know exactly what a regulator may take issue with, our experience providing state filings support for insurance companies has revealed certain things are likely to cause your state filing to get kicked back to you.
Here are the top five reasons regulators reject state filings.
1. Unclear understanding of each state’s filing requirements and expectations
Unfortunately for insurance companies, every DOI has unique requirements for submitting filings, amending filings, and addressing objections. Failure to comply with each DOI’s requirements can turn a simple objection into outright disapproval.
Incorrect formatting or failure to submit the correct information in the right spot can lead to a rejection. For example, certain states require insurers to submit redlines (marked-up versions) in the same area as final new forms in SERFF. In other states, this documentation is simply considered supporting documentation.
Obtaining clarification is not always easy. Regulators in Maryland, Alaska and Pennsylvania are known for being accessible to answer questions before and during the filing. Some states are less likely to respond to inquiries, leaving you on your own to figure things out.
Unless you are keeping close track of what each state requires for new filings, amendments, objections and overall processes, you risk committing an error that can send your filing back to square one.
2. Failure to comply with state regulations
Your company’s regulatory compliance department should know what is and isn’t permitted within your jurisdictions and lines of business. Submitting forms or rates that aren’t permitted by a specific DOI is a surefire way to receive an objection or flat-out disapproval.
States are particular about what they will allow. Some states won’t permit ranges of rates. Some won’t allow certain types of forms or Defense within Limits, which is commonly used for professional liability products.
You can often find this information on the state’s DOI website, but it may not always be available.
Incorporating regulators’ expectations into your product design process can facilitate a more timely approval. Your state filings teams may need to work closely with your product development team to make sure your company’s insurance products are designed with compliance in mind from the start.
3. Lack of response to objections
Slow response to objections trips up many state filings departments. Unfortunately, timelines to address objections vary wildly. Some states can give a month or more to respond to an objection. Others may require an answer in two days. We’ve seen instances of regulators requesting corrections within hours.
If you are not able to respond to an objection by the due date and an extension is not granted, you may want to consider withdrawing the filing and resubmitting later, rather than risk running out of time. Not responding could trigger an automatic disproval—and may land you on the wrong side of regulators.
At Perr&Knight, we use a sophisticated software application, StateFilings.com, that we developed for internal use and then made available for license to our clients. StateFilings.com is a sophisticated tool in the management of state filings. It communicates directly with SERFF, pulling in objections and due dates to make managing workflows less risky.
4. Not reviewing/following the general instructions in SERFF
It may seem like a no-brainer, but it’s surprising how often this happens. Failure to follow directions outlined in SERFF can lead to rejection right off the bat.
While the filing wizard in SERFF led to a massive leap forward in efficiency, some parts of the interface can trip up your filing if you’re not careful. For example, Utah requires a specific certification statement for all filings. If you fail to include this statement with your filing, the Utah Insurance Department will issue an immediate rejection. But SERFF doesn’t have a specific spot for it. Therefore, knowing where to include this information is essential, even if there is no obvious designated area. Many states have unique questions or informational requirements such as this. If fields are blank, SERFF will not let you submit the filing. But knowing when to include specific information in certain fields, even if it’s not technically correct, will enable submission and may provide regulators with the information they require.
Until SERFF includes state-specific filing workflows that match what regulators are looking for, state filings departments will be forced to employ workarounds. Not completing the workarounds correctly—or worse, not knowing they are necessary—could lead to a swift rejection of your filing.
5. Missing or incomplete transmittals or checklists
If your filing is missing a transmittal or checklist, regulators may reject it without even an initial review.
Reasons for incomplete information vary: You may not realize a checklist or transmittal applies to your filing. Some checklists are complex and confusing. In some cases, you may be unsure how to answer a question on a checklist. Depending on the line of business, finding the appropriate checklists and transmittal requirements can be a challenge.
Though the oversight may not be intentional, DOIs don’t care. Missing or incomplete transmittals or checklists mean regulators do not have what they need to move forward, so they may issue a rejection and you’ll be forced to start over. Additionally, using the incorrect version of a transmittal or checklist can also result in an objection.
Ensuring your checklists and transmittals are complete, current, and correct is one of the most basic things you can do to guard against a state filings rejection. Working with partners like the state filings support team at Perr&Knight strengthens your position. Our experts know the requirements of every checklist and transmittal. We peer review your filings to make sure they are complete before submission.
State filings are never static
Our extensive experience providing filings support has shown us that the only constant is change. Insurance regulators have evolved, so certain shortcuts that worked years ago may no longer be enough. Some states permit longstanding workarounds, but others are becoming stricter about following the rules to a T. Regulations vary by state, which can cause hiccups when filing.
Partnering with state filings experts like the team at Perr&Knight can help protect you against avoidable mistakes that lead to rejections. Our state filings support teams dig into the minutiae, tracking nuances by state and line of business. Working with a team with decades of experience helps you avoid missteps from the get-go.
Beyond filing support, our actuarial consulting and product development teams can make sure the products you plan to offer are designed with compliance in mind. This type of up-front work can pay off huge when it’s time to file. A holistic understanding of the intersection between profitability, compliance, and regulatory approval helps you avoid costly mistakes that can slow your time to market.
Whether you handle state filings in-house or offload submissions to an experienced filings support team, keeping the above in mind will protect you against avoidable errors that put your approvals at risk.