1. TWFG Compliance 1

2. 2 Agenda Policy Entry Document Retention Agency Bill USLI Processing

3. TWFG Compliance 3 Compliance Is Everyone’s Responsibility

4. TWFG Compliance 4 Admitted vs. Non-Admitted The insurance market place is primarily made up of standard or admitted carriers and non-standard or non-admitted carriers Admitted carriers are regulated by state insurance departments, and their policy forms and rates are filed Non-admitted carriers are not regulated, nor are their forms and rates filed. Non-admitted carriers exist to provide coverage for risks that cannot find coverage in the admitted market for a number of reasons, including unusually high exposures, no prior insurance, or unacceptable loss histories

5. TWFG Compliance 5 Admitted vs. Non-Admitted Non-Admitted carriers are sometimes called Surplus Lines carriers or E&S (Excess & Surplus) carriers, and the policies are said to be written on non- admitted paper Non-Admitted markets charge state-mandated Surplus Lines Taxes and a Stamping Fee, which must be periodically reported to the state’s DOI In some instances, TWFG is responsible for doing the reporting, so it is imperative that these items be properly invoiced All business written in the Non-Admitted market will be Agency Billed and never Direct Bill

6. TWFG Compliance 6 Admitted vs. Non-Admitted There are usually two entities involved in a Non-Admitted transaction The entity that facilities the transaction is usually a Broker. They are not an insurance company, nor do they issue the policy. They do, however, bill or invoice TWFG, so they are identified as the Billing Company The entity that issues the policy is called the Writing Company. They are the Non-Admitted insurance carrier and coverage is written on their paper An example would be an agent going through Burns & Wilcox to get a non- admitted policy from Scottsdale. Burns will send in invoice to the agent for the Scottsdale policy. Burns is the Billing Company and Scottsdale is the Writing Company

7. TWFG Compliance 7 Admitted vs. Non-Admitted You must qualify that a risk is acceptable to have coverage placed with a non-admitted carrier before you offer the quote to the client. This is called “Due Diligence”. To qualify, the proposed risk cannot be one that would be offered a quote in the admitted market, nor can it be one that has been offered a renewal by an admitted market

8. TWFG Compliance 8 Admitted vs. Non-Admitted Technically, the risk must be declined by at least 3 admitted carriers before offering a non-admitted quote Forms of due diligence might include: Contacting several underwriters and being told that the risk will not fit the admitted market Accessing several carrier websites and checking their risk acceptability lists. If an experienced agent knows that that the insured’s class of business or some aspect of the risk will not be acceptable by the admitted market, they may document this as their due diligence, at their own risk. USE CAUTION

9. TWFG Compliance 9 Admitted vs. Non-Admitted When offering a non-admitted quote, it is your responsibility to disclose to the insured that coverage is being offered in the non-admitted market. Make sure that the insured reads through the proposal carefully and signs an acknowledgment form indicating that they are aware that coverage is being placed with a anon-admitted carrier.

10. TWFG Compliance 10 TWFG Compliance Policy Entry All polices must be entered into eVo by the agent the same day the policy is written. Carriers download nightly. Carriers look at Name, Policy Number, Address, etc. when downloading. Make sure all information in eVo matches the policy documents. Common errors include: Address validation First name entry – ex.: Bill vs. William Policy Number entry

11. TWFG Compliance 11 TWFG Compliance Policy Entry ASI Lloyds & Allstate At the time of binding both issue application numbers, not policy numbers. Do not enter anything in the Policy Number field. This policy will download into an “Unclaimed” insured but we will internally merge.

12. TWFG Compliance 12 TWFG Compliance Policy Entry Example – Direct Bill

13. TWFG Compliance 13 TWFG Compliance Policy Entry Example – Agency Bill

14. TWFG Compliance 14 TWFG Compliance Document Retention (The Burden of Proof Rests With the Agent) Mandatory for all policies written Document Retention is audited by both our carriers and TWFG What documents are we required to maintain? TWFG – Client Required Retention Documents Complete, signed, and dated applications Signed Rejection Forms Proof of Discounts Proof of Prior Coverage Agency/Broker Fee Agreement if applicable (Agency Bill) Any additional information that affects rate or eligibility

15. TWFG Compliance 15 TWFG Compliance Required (1 st Page)

16. TWFG Compliance 16 TWFG Compliance Document Retention Diary – Direct & Agency Bill

17. TWFG Compliance 17 TWFG Compliance Document Retention – Direct & Agency Bill

18. TWFG Compliance 18 TWFG Compliance Direct Bill Process Enter policy in eVo Complete Document Retention Agency Bill Process Enter policy in eVo Complete Document Retention Send Diary to Agency Bill/Commission Workgroup

19. TWFG Compliance 19 TWFG Compliance Agency Bill Agency Bill/Commission Workgroup Diary Check should be made out to TWFG and attached in eVo If financed, the Finance Agreement should be attached in eVo A copy of the Invoice should be attached in eVo Attach above documents in 1 Diary. Only include this attachments. Do not make 3 separate Diaries. Note: IF AGENCY/BROKER FEE IS CHARGED, IT MUST BE INPUT IN THE NOTES SECTION OF THIS DIARY

20. TWFG Compliance 20 TWFG Compliance

21. 21 TWFG Compliance

22. 22 TWFG Compliance

23. 23 TWFG Compliance

24. 24 TWFG Compliance Commercial Lines Compliance Required Documents Commercial Client Required Retention Documents Form Signed proposal or ACORD forms Verification of Loss History Auto – Drivers List/Vehicle List Mandatory Coverage Forms Signed UM/UIM acceptance or rejection Officers Inclusion/Exclusion form for WC Property – Building Cost Estimator Any additional information that affects rating or eligibility

25. TWFG Compliance 25 TWFG Compliance

26. 26 TWFG Compliance USLI Things You Need to Know about USLI

27. TWFG Compliance 27 TWFG Compliance USLI USLI Naming Formats System Generated Referrals Emails to agentinfo@twfg.comagentinfo@twfg.com Calls directly to USLI other than phone quotes What the Bind Request button really does Quote Conditions or Subject To Non-Admitted Carriers

28. TWFG Compliance 28 TWFG Compliance Audits Regular Auditing for Compliance and Agency Bill processes has been Revitalized Why there has to be consequences: Our carrier access is at stake We are failing our carrier compliance audits Our ability to properly pay on time is at stake Reconciling invoices and statements is taking far too long due to non-compliance