Surplus Lines Brokers
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What Defines a Surplus Lines Broker?
Surplus Lines Broker means an individual or business entity licensed to sell, solicit, or negotiate insurance on properties, risks, or exposures located or to be performed in Virginia with non-admitted insurers. Surplus Lines insurance means any property and casualty insurance permitted to be placed directly by an insured or through a Surplus Lines Broker with an eligible non-admitted insurer. [from §38.2-4805.2. Definitions]
How do I Apply for a Surplus Lines Broker (SLB)
Note: Individuals with a Property and Casualty license, who transact Surplus Lines business exclusively through an agency Surplus Lines Broker, are not required to hold an individual Surplus Lines Broker license.
Residents are required to hold an active Property & Casualty license and certify that they have a $25,000 Surety Bond in favor of the Commonwealth with corporate sureties licensed by the Commission. The bond must be effective for the duration of the license.
Agencies applying for a Surplus Lines Broker license will be required to have a Designated Licensed Producer (DLP). The Designated Licensed Producer is not required to hold a Surplus Lines Broker License. However, a resident agency's Designated Licensed Producer is required to hold a Property and Casualty License in Virginia.
How do I File SLB Insurance Premium Tax
Surplus Lines Brokers are required to file Surplus Lines Brokers Insurance Premium Tax Reports with the Department of Taxation. Review the requirements.
Filing your report with the incorrect State Agency does not constitute compliance, and will be returned to the broker.
How do I File the Annual Surplus Lines
Brokers Maintenance Assessment Report?
Surplus Lines Brokers are required to file the Annual Surplus Lines Brokers Maintenance Assessment Report and pay the appropriate assessment by March 1. The minimum Annual Surplus Lines Brokers Assessment is $300 and is required even if no business was transacted. Failure to file the report and pay the assessment by March 1 will result in a filing fine of $50 per day from the due date until filed, and a 10% late payment penalty plus interest.
Once you enter in your Virginia Broker license number, then the report will populate your demographic information and automatically calculate the assessment amount due (minimum of $300) based on the taxable premium entered. You can print the report and mail it with a check to the address noted on the report, or you can file and pay electronically by selecting the File and Pay Assessment button.
Standards of Conduct
Surplus Lines Brokers shall provide a Notice to Insured (Form SLB-9), stating that insurance is not placed with a licensed insurer and therefore, is not protected under the Virginia Property and Casualty Insurance Guaranty Association.
Surplus Lines Brokers must keep records in accordance with §38.2-4807 of the Code of Virginia. Records shall be kept open at all reasonable times for examination by the Commission without notice for a period of not less than five years. Surplus Lines coverage must be placed only with unlicensed insurers approved by the Commission or included on the NAIC Quarterly Listing of Alien Surplus Lines Insurers.
The Surplus Lines Broker license must be renewed prior to July 1 of each year. The renewal period opens 90 days prior to the expiration date of the license. Failure to renew will result in termination of the license effective June 30.