Product Update

Surplus Lines Premium Taxes Updated in Risk Financing


Surplus lines premium taxation is one of the most challenging areas of compliance for state regulators, brokers, and insurers. Nearly all states have adopted or at least follow regulations under the Nonadmitted and Reinsurance Reform Act (2011). Under the Act, only an insured's home state is permitted to collect premium taxes for nonadmitted insurance. Most states calculate surplus lines taxes based on 100 percent of the subject policy premium at the home state's tax rate. Five states (Florida, Hawaii, Massachusetts, New Hampshire, and Vermont) still utilize multistate tax-sharing arrangements based on models reflecting the geographic location of risks. Surplus lines premium tax rates for each state are summarized in a table in Appendix G in this release of Risk Financing.

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