Ways to handle fraud and regulatory surcharges

Option one

You can charge policyholders for fraud and regulatory surcharges. Before doing this, you need to file a new rate or rating manual with us (if your line of business requires you to file them). For more details and requirements, see the policyholder surcharge section below.

Option two

You can build fraud and regulatory surcharges into your rates as one of your expected costs. However, don't include them when calculating premiums on the State Page exhibit or for premium tax purposes. Instead, expense and report them as fees.

Charging policyholders for surcharges from past years

You can only start recouping surcharges for the 2024 regulatory surcharge that was due July 15, 2024.

How we check for compliance

To make sure insurers are following the new law, we will:

  • Review premium tax statements
  • Review rate filings
  • Oversee market conduct

Policyholder surcharge

The policyholder surcharge applies to all lines of insurance. You need to list it separately on the billing or policy statements you send to policyholders.

You should base the policyholder surcharge on the part of the fraud and regulatory surcharges that apply to that policy. For example, if 40% of your yearly premiums come from personal lines auto policies, you should charge 40% of your fraud and regulatory surcharges to those policies.

Also, you should base policyholder surcharges on a policy’s yearly premium, not a fixed amount that doesn't consider the premium.

Canceling a policy if the policyholder doesn't pay the surcharge with their premium

Fraud, regulatory, and policyholder surcharges are not part of premiums. If a policyholder doesn't pay the surcharge, you can't cancel their policy.

Filing new rates if you don't use a policyholder surcharge

If you include fraud and regulatory surcharges as part of your rate structure, you don't need to file new rates.