Introduction to Slips and Bordereau Reporting

In the world of surplus lines and non-admitted insurance, standard insurance forms often give way to more specialized documentation. Because surplus lines transactions frequently involve international markets (such as Lloyd's of London) and delegated underwriting authorities, specific tools like slips and bordereaux are essential. These documents ensure that complex risks are properly documented and that premiums and claims are accurately reported to all stakeholders.

For candidates preparing for the complete Surplus Lines exam guide, understanding these terms is vital. They represent the backbone of the administrative and regulatory flow of information between brokers, Managing General Agents (MGAs), and the surplus lines insurers who ultimately carry the risk.

A slip is a technical document used primarily in the London and surplus lines markets to present a risk to potential underwriters. It serves as the summary of the insurance or reinsurance contract. In modern practice, this is often referred to as a Market Reform Slip (MRS).

The slip is created by the broker and contains all the material facts about the risk being placed. Key elements typically found on a slip include:

• Risk Description: A detailed account of what is being insured (e.g., a high-value commercial property or a unique professional liability exposure).
• Period of Cover: The effective and expiration dates of the policy.
• Limits of Liability: The maximum amount the insurer will pay for a loss.
• Premium: The cost of the coverage, including any commissions or fees.
• Conditions and Exclusions: Specific clauses that govern how the policy will respond to claims.
• Security: The names of the insurers or syndicates participating in the risk and the percentage of the risk each is assuming.

When an underwriter agrees to take on a portion of the risk, they "scratch" (sign or stamp) the slip, indicating their acceptance of the terms and the share of the risk they are willing to cover.

While a slip documents a single placement, a bordereau (plural: bordereaux) is a periodic report—typically a spreadsheet or data file—provided by an entity with delegated authority (like an MGA) to an insurer or reinsurer. This report lists all the risks, premiums, or claims handled during a specific period.

Bordereau reporting is the mechanism that allows surplus lines insurers to maintain oversight of the business being written on their behalf. Without this detailed data flow, an insurer would not be able to track their total exposure, calculate necessary reserves, or ensure that the MGA is operating within the guidelines of their binding authority agreement.

To succeed on your exam, you should practice identifying these administrative workflows by utilizing practice Surplus Lines questions that focus on delegated authority and market conduct.

Historically, bordereaux were paper-based ledgers, but modern surplus lines operations rely on electronic data interchange. Standardizing this data is one of the biggest challenges in the industry. If every MGA uses a different format, the insurer cannot easily aggregate the data to see their total aggregate exposure in a specific geographic area (such as a hurricane zone).

In the surplus lines market, accurate bordereau reporting is also critical for tax purposes. Since surplus lines premium taxes are often calculated based on the location of the risk, the bordereau must accurately capture the "home state" of the insured and the allocation of premiums across different jurisdictions if the risk is multi-state.