Levy owed by the broker on any premium placed with a non-admitted insurer in the United States, at a rate varying by state, adding to the cost of risk with no guaranty fund in return.
A state that lets a risk be placed outside its licensed market loses control of rates and forms, and it also loses the revenue the admitted market provides. Surplus lines tax makes up for the second loss. It is due on premium placed with a non-admitted insurer, it is collected and remitted by the surplus lines broker, who is personally liable for it, and its rate varies from state to state in an order of magnitude of a few percent. Several states add stamping fees collected by a market office that checks the compliance of declared placements. Two points deserve the attention of underwriter and buyer alike. The tax is added to the premium rather than deducted from it, which makes non-admitted placement costlier beyond the rate difference alone, and it is due even though the insured enjoys no state guaranty fund protection. Since the 2011 federal reform only the insured's home state is competent to collect it, which removed the allocation across states for a risk sited in several.
A company headquartered in Texas placing a property cover with 3M USD of premium with a non-admitted insurer pays Texas tax on the whole premium, including the share attributable to its sites in four other states, under the home state rule set in 2011. Before the reform, the same premium was split across five tax administrations at different rates.
surplus lines tax, taxe de courtage excédentaire, stamping fee, taxe sur le marché non agréé