Licensed Insurance Producers and Surplus Lines Brokers
Lines Requirements in AS 21.34 Apply to Subscription Policies that
Combine Admitted Insurance with Surplus Lines or Unauthorized Insurance.
of this bulletin is to point out to insurance producers and surplus
lines brokers the effect of AS 21.34.025 on subscription policies.
21.34.025 provides that subscription policies, or jointly underwritten
policies, are treated as surplus lines placements in their entirety
if written by a combination of authorized and nonadmitted insurers.
Nonadmitted insurers include "eligible" or "white-listed"
surplus lines insurers and chapter 33 unauthorized insurers. Therefore,
if at least one surplus lines or unauthorized insurer participates,
the entire policy, including any admitted insurance portion, is
subject to the requirements of chapter 34 of the Alaska Insurance
When a subscription
policy is considered surplus lines under AS 21.34.025, every
person placing the policy must be licensed as required by AS 21.27.
The insurance producer must be a licensed surplus lines broker,
or must involve a licensed surplus lines broker to place the coverage.
Surplus Lines Fee
Under AS 21.09.210,
premium tax on admitted insurance is paid by the insurer. But when
admitted insurance is part of a subscription policy subject to chapter 34,
AS 21.34.180(a) makes the surplus lines broker responsible
for collection of premium tax "as specified by the director."
However, nothing in the statutes or the legislative history indicates
that the legislature intended the admitted portion of a subscription
policy to be double taxed.
surplus lines broker who places a subscription policy that includes
admitted insurance must verify that the admitted insurer pays the
tax, but does not again collect tax that the policyholder has already
paid through the admitted portion of the premium. The surplus lines
broker is not required to collect tax on the admitted portion of
a subscription policy if the broker
that the admitted company or companies reports that portion of
the premium and pays the tax to the state;
- obtains a
certificate from the admitted company that it reports the premium
and pays the tax; and
the certificate to the surplus lines brokerís monthly transaction
lines broker is responsible to collect and pay the premium tax on
surplus lines and unauthorized portions of a subscription policy.
The surplus lines brokerís monthly transaction report must show
the gross premium charged for the subscription policy, and use the
exemption page to explain that premium tax on the admitted portion
is paid by the admitted insurer. "See attached certificate"
may be shown as the reason for the exemption.
lines broker is also responsible for collection of the 1% surplus
lines filing fee imposed by AS 21.34.190. This fee applies
to the total amount of the premium charged, including both the admitted
and non-admitted portions of the placement.
of an unlisted nonadmitted insurer
If a portion
of a subscription policy is placed with a nonadmitted insurer (also
referred to as unauthorized) that does not appear on the list of
eligible surplus lines insurers published under AS 21.34.050
(also referred to as the "white list"), additional chapter 34
requirements apply. The surplus lines broker and the unauthorized
insurer must comply with the applicable requirements of AS 21.34.040,
including furnishing the nonadmitted insurerís current annual statement
to the director, and AS 21.34.060 and 3 AAC 25.010(b).
Within 30 days after placing the coverage, the surplus lines broker
- notify the
director in writing of the name of each unlisted nonadmitted insurer
with which placements are intended, and of the amount and percentage
of each risk to be placed with that insurer;
- send written
notice to the insured and the producing broker that the insurance,
or a portion of it, has been placed with the unlisted nonadmitted
34 requirements that apply when a subscription policy is considered
surplus lines under AS 21.34.025 include the following:
- The insurance
producer must comply with the due diligence requirements of AS 21.34.020(3).
- The surplus
lines broker must comply with the reporting requirements of AS 21.34.170.
- The policy,
including the admitted insurance portion, must provide information
required in chapter 34, including the surplus lines stamp,
the taxes and fees charged, and the notices required by various
provisions of AS 21.34.
whole placement is exempted from the Guarantee Association coverage
and is not subject to rate and form filings, even for the portion
of the risk that is placed with admitted insurer(s).
of Insurance intends to enforce strict compliance with the statutes
and regulations because public protection requires no less. The
division will also act to ensure that financial obligations to the
State of Alaska are satisfied. For questions regarding this bulletin,
please contact the Division of Insurance, P.O. Box 110805, Juneau,
AK 99811-0805; (907) 465-2515, fax (907) 465-3422; or the Anchorage
office at (907) 269-7900; fax (907) 269-7910; or via electronic