- Massachusetts maintains a list of eligible surplus lines insurers (see Other Comments section #1).
- Massachusetts does have a Surplus Lines Association (see Other Comments section #2).
- Massachusetts does not have an Export List.
- Massachusetts recognizes a diligent search exemption for commercial policyholders. § 175.168(b)(iii) – (iv). However, the exemption does not match the NRRA approach to exempt commercial purchasers. Therefore, both the Massachusetts exemption and the NRRA exemption are in effect as of 7/21/2011.
- Surplus lines tax: 4%, payable by broker.
- Massachusetts has not affiliated with any existing compact and has taken no legislative action to comply with NRRA. Until such time as the Commissioner enters into a cooperative agreement, reciprocal agreement or compact, Massachusetts shall keep 100% of the surplus lines premium tax for coverage provided to an insured for whom Massachusetts is the Home State.
Eligibility and Filing Requirements (All Insurers):
- Annual filing fee: $150 (by March 1).
- CPA Audited Financial Report: to be filed 120 days after company’s fiscal year end.
- IID Financial Format: by July 31 (alien insurers only).
Eligibility and Filing Requirements (Alien Insurers Only):
Massachusetts cannot prohibit surplus lines producers from placing insurance with alien insurers that appear on the Quarterly Listing of Alien Insurers maintained by the NAIC. § 384.021. Accordingly, Massachusetts may maintain separate requirements for alien insurers (§ 175.168(c)(iii)), but the state cannot prevent placement of insurance with those that appear on the NAIC list.
Eligibility and Filing Requirements (Foreign Insurers Only):
- Licensed in its domiciliary jurisdiction; and
- Capital and surplus or its equivalent under the laws of its domiciliary jurisdiction equal to the greater of the minimum capital and surplus requirements under the laws of the home state or $15 million.
Under NRRA, an insurance commissioner may waive the minimum capital and surplus requirement for a nonadmitted insurer if he 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:
None. (see Other Comments section #3 below with respect to tax exemption for ocean marine coverage).
Other Comments or Requirements:
- The single link below will bring you to a webpage where you will find, among others, a list of Massachusetts Eligible Surplus Lines Companies and a list of Eligible Alien Unauthorized Insurers [in Adobe and Excel formats]. Hypertexts to both lists are on the single webpage that can be accessed using this link: http://www.mass.gov/ocabr/licensee/license-types/insurance/insurance-companies/massachusetts-licensed-insurance-companies.html [Put the cursor anywhere in the blue text and hit Enter].
- New England Surplus Lines Association Massachusetts contact:
- Under M.G. L. c. 175, sec. 160, ocean marine coverage may be placed with a non-admitted company by a licensed insurance producer if the company involved is “possessed of net cash assets of at least one million dollars computed on the basis fixed by sections ten to twelve, inclusive, and meets all the requirements of section one hundred and sixty-eight relating to foreign companies not authorized to transact business in the commonwealth.” Since M.G.L. c. 175, sec. 160 specifically permits ocean marine insurance to be placed with non-admitted companies by licensed Massachusetts insurance producers without the necessity of obtaining a special insurance broker license, the requirements of M.G.L. c. 175, sec. 168, including the payment of a surplus lines fee, would not apply in this instance.
- M.G.L. §175:168 prohibits accident and health, workers’ compensation, compulsory motor vehicle liability and life insurance coverage placements in the surplus lines market.
- Massachusetts requires surplus lines agents to collect special assessments from insureds on surplus lines premiums and remit the assessment specified by order of the Insurance Commissioner to help fund the Massachusetts Windstorm Catastrophe Fund. These funds are only assessed on surplus lines premiums if so determined by the Massachusetts Insurance Commissioner if deemed necessary to ensure a stable source of reimbursement to both the FAIR plan and private sector insurers for a portion of their losses from catastrophic windstorm events
- Assured must sign affidavit (Form BR-7), which must also be signed by broker, stating that he was informed by his insurance broker that the type and amount of insurance could be obtained from insurer’s not admitted in Massachusetts and that:
A. The surplus lines insurer with whom the insurance was placed is not licensed in Massachusetts and is not subject to Massachusetts regulations; and
B. In the event of the insolvency of the surplus lines insurer, losses will not be paid by the state insurance guaranty fund.