General Information:

  1. Kentucky does not maintain a list of eligible surplus lines insurers.
  2. Kentucky does have a Surplus Lines Association.
  3. Kentucky does not have an Export List.
  4. Kentucky does have an industrial insured exemption (see Appendix C) as well as a statutory exempt commercial purchaser exemption. It also recognizes the ECP definition under NRRA unless or until SLIMPACT rules are issued.
  5. Surplus lines tax: 3% plus 1.8% surcharge, payable by broker (See Other Comments section #1).
  6. Kentucky adopted SLIMPACT (HB 167) Effective: June 8, 2011. Advisory Opinion 2011-24.

Eligibility and Filing Requirements (All Insurers):

  1. Annual Statement/Report: certified and in U.S. dollars preferred, plus $100 annual statement fee.
  2. Service of Process form.
  3. Kentucky does not currently have any statutory eligibility requirements for surplus lines insurers. If Kentucky chooses to enact eligibility requirements, the requirements must match those set out in NRRA or match “nationwide uniform” standards adopted by all of the states. The Compact Commission is charged with promulgating uniform rules for compacting states regarding foreign insurer eligibility requirements as authorized by NRRA Art III(3)

Eligibility and Filing Requirements (Alien Insurers Only):

Kentucky may not prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance from, a nonadmitted insurer domiciled outside the U.S. that is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurers Department of the NAIC.

Eligibility and Filing Requirements (Foreign Insurers Only):

Kentucky may not impose eligibility requirements on, or otherwise establish eligibility criteria for, nonadmitted insurers domiciled in a U.S. jurisdiction, except:

  • Kentucky may require that the insurer be authorized to write the type of insurance in its domiciliary jurisdiction; and
  • Kentucky may require that the insurer have capital and surplus or its equivalent under the laws of its domiciliary jurisdiction which equals the greater of:
    • The minimum capital and surplus requirements under the law of Kentucky; or
    • $15,000,000

The insurance commissioner may waive the minimum capital and surplus requirements above if the commissioner makes an affirmative finding of acceptability after considering: quality of management, capital and surplus of a parent company, company underwriting profit and investment trends, market availability, and company record and reputation within the industry. The commissioner may not make a finding of acceptability if the insurer’s capital and surplus is under $4.5 million.

Types of Insurance Exempted from Surplus Lines Regulation:

  1. Ocean marine and foreign trade insurances.
  2. Insurance on vessels, craft of hulls, cargoes, marine builder’s risk, marine protection and indemnity or other risks, including strikes and war risks commonly insured under ocean or wet marine forms of policy.
  3. Insurance on subjects located in, resident of, or to be performed wholly outside of Kentucky, or on vehicles or aircraft owned and principally garaged outside Kentucky.
  4. Insurance on operations or railroads engaged in transportation in interstate commerce and their property used in such operations.
  5. Insurance of aircraft owned or operated by manufacturers of aircraft or of aircraft operated in commercial interstate flight or cargo of such aircraft or against liability other than workers’ compensation and employers’ liability arising out of the ownership, maintenance or use of such aircraft.
  6. Industrial Insurance.

Other Comments or Requirements:

  1. There is also a Local Government Premium Tax (LGPT) imposed by some municipalities, at varying rates depending on line and location.
  2. Every insurance contract procured and delivered as a surplus lines coverage must have conspicuously stamped upon the face page, initialed by or bearing the name of the surplus lines broker who procured it, the following:
    “This insurance has been placed with an insurer not licensed to transact business in the Commonwealth of Kentucky but eligible as a surplus lines insurer. The insurer is not a member of the Kentucky Insurance Guaranty Association. Should the insurer become insolvent, the protection and benefits of the Kentucky Insurance Guaranty Association are not available.”
  3. The Kentucky Legislature enacted Legislation in 2014 which authorizes associations and member underwriters authorized to transact business in Kentucky to qualify as eligible surplus lines insurers if they meet the minimum capital and surplus standards and, if applicable, are listed on the NAIC’s Quarterly Listing of Alien Insurers.