What is surplus line insurance?
Surplus line insurance is insurance placed with unauthorized insurers through surplus line agents or producers. A surplus line producer is one licensed to procure insurance under DC Code 31-2502.40.
What is a surplus line insurer?
A surplus line insurer is one that does not hold a certificate of authority to do insurance business in the District of Columbia, but a surplus line agent or producer procures insurance through a surplus line insurer.
What regulations are unauthorized insurers subject to?
The placement of insurance with an unauthorized insurer is subject to DC Code 31-2502.40. Risks insured by unauthorized insurers must be placed and serviced by District of Columbia licensed surplus line agents or producers.
May surplus line agents place risks with any unauthorized insurer?
No agent or producer shall procure policies from unauthorized companies (1) without exercising diligent effort to secure the required business in duly authorized companies; (2) whose standards of solvency and management do not meet the requirements necessary for the protection of the policyholders; (3) for any risk which could be placed with an authorized company except for abnormal provisions of the policy; and (4) which covers a risk of a class generally covered in the District by authorized companies and which authorized companies would cover at a rate not higher than that charged by authorized companies on other District risks of the same class.
Are surplus line insurers required to file Annual Statements with DISB?
Unauthorized insurers (“surplus line insurers”) are not required to file Annual Statements with DISB.
Are surplus line insurers required to have a license or register with DISB?
No. Surplus line insurers are not required to have a license or register with DISB. Also, the District of Columbia does not have "approved" surplus line insurers and DISB does not maintain any such list.
What procedures does a surplus line agent have to follow?
The surplus line agent or producer must follow procedures outlined in DC Code 31-2502.40, including monthly reporting under affidavit of all unauthorized business placed during the month by the 10th day of the following month.
What records does a surplus line agent have to keep?
The surplus line agent or producer must maintain a separate account of the business transacted under DC Code 31-2502.40, which shall be open at all times to the inspection of the Commissioner.
Is surplus line business subject to District of Columbia tax?
Insurance business transacted under the surplus line statue, DC Code 31-2502.40, is subject to a premium tax of 2 percent of gross premiums. All premium taxes collected by the surplus line agent shall be reported and forwarded to the Commissioner semiannually on or before February 1 and August 1 of each year, for policies procured during the immediately preceding six-month period ending December 31 and June 30 respectively. Gross premium shall include the premium or charge specified in the policy and applicable to such insurance, and any and all other revenue earned or fee charged that is incidental to placing the risk. A Surplus Line Agent may only charge fees which are incidental and necessary to placing the risk. Any fee charged must be itemized separately.
What is the process for becoming licensed as a Surplus Line Agent or Producer?
An applicant may obtain a producer’s license with surplus line authority by going to nipr.com. All applicants for surplus line authority must have or obtain simultaneously casualty authority. Also, non-resident applicants must have surplus line in their resident state at time of application.
For information on how to file insurance complaints send an email to email@example.com or call (202) 727-8000 and ask for DISB's complaints unit.