Surplus Lines Broker FAQs Individual and Business Entities

Surplus Lines Broker FAQ's (Individual and Business Entities)

SURPLUS LINES TAX FILINGS

What are the procedures for filing Surplus Lines Statements (SL-8) under Section 38a-741(b)(1) of the Connecticut General Statutes?

Under previous law, Surplus Lines Brokers were required to file notarized affidavits with the Commissioner within 45 days of the policy effective date. That law is now obsolete. Now, Surplus Lines Brokers file Surplus Lines Statements (the “SL-8 Statement”), instead of notarized affidavits, when making their quarterly premium tax filing in OPTins (www.optins.org) at the NAIC website. See Department Bulletin SL-4.

Surplus Lines Statement SL-8 Form & Instructions (PDF)

Quarterly Tax Return Filing: All surplus lines licensees (individuals and business entities), who have conducted surplus lines business in Connecticut within a filing quarter, are required to electronically file a premium tax filing, which includes forms SL-9 (“Tax Return” form), Schedules A, B and C, as appropriate, according to the filing deadline schedule below. All returns must be filed electronically, in OPTins. A quarterly filing is not required if no Connecticut surplus lines business has been conducted for the filing quarter.

Policy Period: January 1 through March 31 – Tax Payment Due Date: May 15
Policy Period: April 1 through June 30 – Tax Payment Due Date: August 15
Policy Period: July 1 through September 30 – Tax Payment Due Date: November 15
Policy Period: October 1 through December 31 – Tax Payment Due Date: February 15
What are the tax filing requirements?

The tax rate is four percent (4%) on the gross premium charged the insured. See Department bulletin SL-2.
Is a tax return required if there is no activity for the reporting period?

No, no filing is necessary for “$0” returns.
If I have a quarterly tax filing, which has resulted in a credit, do I still need to file?

Yes. A filing which has a credit balance must be filed for that quarter. The broker may then apply the credit toward the next three filing quarters, until it is used up.
May I request a refund if I file a return with a credit?

You must apply the credit toward any surplus lines tax owed, on your next quarterly filing. (See SL-9 Form in OPTins, Line 3e “credit from prior return”). You may apply for a refund if, after 3 consecutive quarters, the credit amount remains, or the licensee has cancelled the surplus lines license. You may submit your request to: cid.surpluslines@ct.gov.
How are endorsements reported?

The endorsement should be reported and paid in the filing quarter of the invoice.
Are any surplus lines premiums exempt from the 4% surplus lines tax? (C.G.S.38a-743)

Yes. Premium tax shall not apply to any policy issued to the State of Connecticut or any agency thereof or to any policy issued to any town, or agency of such town or special taxing district appears in the policy as the named insured and is responsible for the payment of premiums shown on the policy.
Does the Surplus Lines Statement (SL-8) need to be completed for Exempt Commercial Purchasers (ECP)?

In accordance with Bulletin SL-2 please note the following:

On or after July 21, 2011, the NRRA provides that a surplus lines broker seeking to procure or place non-admitted insurance on behalf of an "exempt commercial purchaser" is not required to perform a diligent search if: 1) the broker has disclosed to the exempt commercial purchaser that insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and 2) the exempt commercial purchaser has subsequently requested in writing for the broker to procure or place such insurance from a non-admitted insurer. 11 Public Act 11-61 adopts the NRRA definition of "Exempt commercial purchaser," which is set forth in the "key definitions" section of this bulletin below.

Please review Department Bulletin SL-2 for the definition of an “Exempt Commercial Purchaser”.
Does the Surplus Lines Statement (SL-8) need to be completed each year for an insured if the policy is a renewal?

Yes.
Does the Surplus Lines Statement (SL-8) need to be submitted for each event policy if it is the same event or same organization?

Yes. A separate statement needs to be submitted for each event.
Does the Department accept electronic form(s) or stamped signatures on the SL-8 statements?

Yes.
Are penalties and interest assessed for late filing?(C.G.S. 38a-743)(C.G.S 38a-2)

If the tax is not paid on its due date, there is a penalty of ten percent (10%) of the premium tax due and interest of one percent of the premium tax per month (or fraction of a month) that the tax payment is late. Please do not remit penalty and interest payments, with your late tax payment. The Insurance Department will assess the late filing, in OPTins, for penalty and interest, and will send an email “invoice” to the Surplus Lines filer to advise that the assessment has been made. The OPTins filer can then go back into the filing quarter (for which the late tax payment was made), and pay the assessment on that quarterly filing in OPTins, electronically.
Are brokers and producers allowed to charge service fees and what are the limits? (Regulation Sec. 38a-707-1 to 38a-707-9)

Service Fees to Be Charged By Insurance Producers and Surplus Lines Brokers
Are broker fees, services fees and policy fees subject to the 4% surplus lines tax?

No.
Where is the White List (listing of surplus lines insurers) located?

You will find surplus lines insurers among the "List of Licensed Companies, Approved Reinsurers and Surplus Lines Insurers (PDF)". A "k" in the type column will indicate the company is a surplus lines insurer. This list is compiled and maintained by the Financial Regulation Division.
What is the Exportable List? (C.G.S. 38a-741)

It is a listing of lines of insurance or their components for which coverage is believed by the Commissioner to be generally unavailable from licensed insurers. Brokers are not required to submit affidavits for risks that are included on the Exportable List. This list is compiled and maintained by the Financial Regulation Division.
Is there specific wording that is required to be stamped on the surplus lines policies? (C.G.S. 38a-745)

Each insurance policy issued or renewed on or after January 1, 2015, pursuant to sections 38a-741 to 38a-744, inclusive, AND 38a-794 by a surplus lines insurer shall bear on its cover, in not less than twelve-point boldface type in capital letters. The following:

NOTICE: THIS IS A SURPLUS LINES POLICY AND IS NOT PROTECTED BY THE CONNECTICUT INSURANCE GUARANTY ASSOCIATION OR SUBJECT TO REVIEW BY THE CONNECTICUT INSURANCE DEPARTMENT. IT IS IMPORTANT THAT YOU READ AND UNDERSTAND THIS POLICY.
What is the 115A form?

The 115A form is a Revenue Services form and is used for submitting surplus lines taxes when the coverage is a direct procurement (meaning the insured procures in insurance directly from the surplus lines company without using a surplus lines broker.) In this case the taxes are paid to the Department of Revenue Services.
Where would I find information about Independently Procured Policies?

Contact Department of Revenue Services or by phone at 860-297-5962.
I still have questions regarding the Surplus Lines filing, who do I need to contact?

Please contact the OPTins helpdesk at (816) 783-8990 or optinshelp@naic.org for electronic filing problems, or for surplus lines regulatory questions, e-mail to cid.surpluslines@ct.gov.

SURPLUS LINES LICENSING

What is the correct application for surplus lines licensing and where do I obtain it?

Individual or Business Entity may apply on the CID website or at National Producer License Registry (NIPR) Under Licensing Center, select “Apply for License.”
What are the fees for surplus lines licenses?

The initial and reinstatement fee is each $675.00. The renewal fee is $625.00.
What is the renewal date for surplus lines licenses?

Surplus lines licenses renew September 30th each even numbered years. You must renew electronically at National Producer License Registry (NIPR). Under Licensing Center, select “Renew a License.”
You may renew your SL license up to 90 days prior to the expiration date.
What is the expiration date of the Surplus Lines license?

All surplus lines licenses expire September 30th of even numbered years. There is no pro-rating.
Renewal fees are non-refundable, review your submission carefully.
Are Surplus Lines licensees required to complete continuing education requirements?

No, there are no continuing education requirements for Surplus Lines Licensees.
What are the requirements for obtaining a NON-RESIDENT surplus lines broker license?

Both non-resident individuals and non-resident business entities applying for a surplus lines license must hold an active surplus lines license in another state.
What are the requirements for obtaining a RESIDENT surplus lines broker license?

Both individuals and business entities applying for a surplus lines broker license must be currently licensed and in good standing as a Connecticut Property and Casualty Producer. There is an examination requirement for INDIVIDUALS. To schedule your exam, please contact our test vendor, Pearson VUE or 866-407-2057.

For a business entity to obtain/maintain a license there needs to be at least one designated license responsible person (DLRP) who is actively Surplus Lines licensed in Connecticut.
Is there a bond requirement for residents or non-residents?

No, a bond is not required.
Are surplus lines applicants required to take a pre-licensing course prior to taking exam?

No, a pre-licensing course is not required.
Where may I find study material?
- Pearson VUE
- Statutes
- Connecticut Insurance Regulations:
  - Service Fees to Be Charged By Insurance Producers and Surplus Lines Brokers
I need to obtain a business entity license, what do I need to do?

You may apply for the business entity license by going to nipr.com. Under Licensing Center, select “Apply for a License.”
For a business entity to obtain/maintain a license there needs to be at least one designated license responsible person (DLRP) who is actively Surplus Lines licensed in Connecticut.