INDUSTRIAL INSURANCE – EXEMPTIONS BY STATE

 

State Industrial Insured Statutory Requirements Statutory Reference To Insurance Code Statutory Reference To Exempt Commercial Purchaser

Alabama		 1) Insurance procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums on all risks other than workers’ compensation and group insurance; and
3) Minimum 25 employees.		 §27-10-20(2) Not codified.
Alaska(1) No 21.34.020(b), §21.34.900(6)

Same as NRRA

Bulletin B 19-15 updates the  amounts in subclauses (I), (II), and (IV) of clause (C) in 15 U.S.C.(5)(C)(ii)

Arizona		 1) Insurance procured through qualified risk manager;
2) Minimum $100,000 aggregate annual gross premiums for insurance on all property and casualty risks; and
2) Meets at least one of the following criteria:
a) Minimum $20 million net worth;
b) Minimum $50 million net revenues or sales;
c) Minimum 500 full-time employees per individual company or 1,000 full-time employees per holding company;
d) municipality with a minimum population of 50,000
e) nonprofit or public entity with a minimum $30 million in expenditures
Qualified risk manager has the same definition as the NRRA.
Arizona’s exemption for industrial insureds is the same exemption as under the NRRA, Bulletin 2011-06 (June 28, 2011).
3% (annually). §20-401.07(A).		 §20-401.07(C) Arizona uses the term “industrial insured,” rather than “exempt commercial purchaser.”
Bulletin 2011-06 (June 28, 2011)
Arkansas(2) 1) Insurance procured through full-time risk manager or insurance manager or utilizes the services of a regularly and continuously qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.
Subject to taxes specific to captives under §23-63-1614.		 §23-63-1601(12) §23-65-30(5), §23-65-305
Same as NRRA.
Subject to 2% tax (within 30 days after insurance procured, continued or renewed) (includes surplus lines insurance when procured without use of a surplus lines broker). §23-65-103(c).
California(3) 1) Employs at least 25 employees on average during the prior 12 months; and
2) Minimum $25,000 aggregate annual premiums for insurance on all risks other than workers’ compensation and health coverage; or insurance procured through full-time employee acting as an insurance manager or “continuously retained insurance consultant.”
“Continuously retained insurance consultant” does not include:
a) an agent or broker through whom the insurance is being placed;
b) a subagent or subproducer involved in the transaction; or
c) an agent or broker that is a business organization employing or contracting with any person mentioned in clauses (a) and (b).		 CIC
§1764.1(c)(1)		 California uses the term “commercial insured” rather than “exempt commercial purchaser”

CIC 1760.1(b) and 1763(h)

Colorado		 1) Insurance (excluding life and annuity contracts) procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant who does not receive commission or compensation for placing the risk;
2) Minimum $100,000 aggregate annual premiums on all risks; and
3) Minimum 100 full-time employees.		 §10-3-910(2) Not codified.

Connecticut		 1) Insurance procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant; and
2) Minimum $50,000 aggregate annual premiums (excluding life, accident and health insurance).		 §38a-271(b)(6) Conn. Gen. Stat. § 38a-741(b)(2); Bulletin SL-2 (July 18, 2011)
Same as NRRA
Delaware(2) 1) Insurance procured through full-time insurance manager or buyer; and
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.
No information regarding taxes.
Subject to taxes specific to captives under §6914.		 §6902(20) §1914(b); Surplus Lines Bulletin 14 (August 11, 2014)
Same as NRRA
Subject to 3% tax for new and renewal policies with an effective date on or after July 30, 2014. Surplus Lines Bulletin 14 (August 11, 2014).

District of Columbia		 No — Not codified.
Florida(2) No. § 626.938 Industrial exemption/not codified.
Recognizes Independently Procured coverage.
Georgia(2) 1) Insurance procured through full-time insurance manager, risk manager or insurance buyer, or through licensed property and casualty agent, broker or counselor;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Meets one of the following criteria:
a) Minimum 25 full-time employees;
b) Minimum $3 million gross assets; or
c) Minimum $5 million annual gross revenues.
Subject to taxes specific to captives under §33-41-22.		 §33-41-2(5) §33-5-20.1(1); Bulletin 11-EX-3 (September 12, 2011)
Same as NRRA
Subject to 4% tax (within 30 days). §33-5-33(a); Bulletin 11-EX-3 (September 12, 2011).

Hawaii		 No — §431:8-102; Memorandum 2011-4E (October 18, 2011)
Same as NRRA
Subject to 4.68% tax (within 45 days after the end of the calendar quarter in which the insurance was procured, continued, or renewed). §431:8-205(b) and (c); Memorandum 2011-4E (October 18, 2011).

Idaho		 No — §41-1213(5)(a) and (b); Bulletin 11-08 (November 28, 2011)
Same as NRRA
“Commercial insurance” defined as “property and casualty insurance pertaining to a business, profession, occupation, nonprofit organization or public entity.” §41-1213(5)(c).
Subject to 1.5% tax for policies new and renewal policies with an effective date on or after July 1, 2011 (within 30 days after insurance procured, continued or renewed).
§ 41-1215; §41-1233(1) and (3); 41-1229(1).
Illinois(4) 1) Insurance (excluding life and annuity contracts) procured through full-time employee who is a qualified risk manager (as defined in the NRRA) or a regularly and continuously retained consultant who is a qualified risk manager.
2) Procured directly from an unauthorized insurer without the services of an intermediary insurance producer.
3) Insured is an exempt commercial purchaser (as defined in the NRRA) whose home state (as defined in the NRRA) is Illinois.
4) Must file policies (effective 1/1/15 or later) within 90 days of effective date, and endorsements within 90 days of issuance.
5) Must pay taxes and filing fees within 30 days of filing. Tax is 3.5% plus up to 1% fire marshal tax on property (depending on coverage). Filing fee is 0.2% of premium.		 215 ILCS 5/121-2.08
215 ILCS 5/123C-1(F) is a separate and different definition that relates to Illinois domestic captives only)		 215 ILCS 5/445(1)
Same as NRRA

Indiana		 1) Insurance procured through full-time insurance manager or buyer, or regularly retained and continuously qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks;
3) Minimum 25 full-time employees; and
4) Remits a 2.5% tax on all gross premiums on semi-annual filing schedule.  January through June is due by August 1 and July through December is due by February 1.		 §27-4-5-2(a)(8) Not codified.

Iowa		 No — Not codified.
Kansas(2) Industrial Insured 1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $50,000 aggregate annual premiums for the kinds of insurance procured;
3) Minimum 25 full-time employees;
4) Principal activity consists of the manufacture of a product or products; and
5) Minimum $10,000 contributed to the capital or surplus of the industrial insured captive insurance company that insures its risks.Exempt Commercial Purchaser 1) Employs or retains a qualified risk manager to negotiate insurance coverage;2) Maintains paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 annually; and3) Possesses a net worth in excess of $20,040,000; generates annual revenues in excess of $55,100,000; employs more than 500 full-time employees per insured entity or is a member of an affiliated group employing more than 1,000 employees; is a not-for-profit organization or public entity with annual expenditures of at least $33,060,000; or is a municipality with a population in excess of 50,000 persons.		 §40-4301(e) § 40-246i
Kentucky(7) Industrial Insured 1) Insurance (excluding life and annuity contracts) procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks;
3) Minimum 25 full-time employees; and
4) Qualified as an industrial insured as of July 1, 1999.
Exempt Commercial Policyholder. Employs the services of an insurance agent or broker, procures commercial insurance with the services of a full-time risk manager, or a licensed insurance consultant, and:
1) Is a city, county, or urban-county with minimum population of 50,000 persons, or the Commonwealth of Kentucky, or a not-for-profit organization or a public entity with a minimum $25,000,000 annual budget or $25,000,000 in assets in the preceding fiscal year; or
2) Certifies that it meets all four (4) of the following criteria:
(i) Minimum $25,000,000 net worth at the time the policy of insurance is issued;
(ii) Minimum $50,000,000 net revenue or sales in the preceding fiscal year;
(iii) Minimum 100 employees per individual company or 200 employees per holding company aggregate at the time the policy of insurance is issued; and
(iv) Minimum $500,000 in annual aggregate insurance premiums in the preceding fiscal year.
Filing Requirement. All industrial insureds and exempt commercial policyholders must reapply to the Commissioner of Insurance for their respective insured status every three years, on a form the Commissioner of Insurance shall promulgate by administrative regulation.
Any industrial insured that filed an affidavit prior to July 1, 1999 which established it satisfied the then-existing criteria for obtaining that status must reapply for their status by filing with the Commissioner of Insurance an “Industrial Insured Affidavit” (Form II-1 P & C) for his approval, certifying that the requirements of §304.11-020(2)(a) continue to be satisfied.		 §304.11-020(2)(a) and (c)
§304.49-010(7)
806 KAR 11:010, § 1		 § 304.10.030, § 304.10.040; Advisory Opinion 2011-04 (June 3, 2011) includes an alternate definition of ECP
Same as NRRA.
To the extent that a prospective insured meets either the KY or Federal definition of an exempt commercial purchaser, KY’s due diligence requirement is preempted. The definitions of an exempt commercial purchaser under NRRA and an exempt commercial policyholder under KY law differ slightly. If an insured meets the definition of an exempt commercial purchaser under NRRA, federal law will govern the multi-state non-admitted insurance transaction covering the exempt commercial policyholder. In this event, the surplus lines broker placing the coverage must comply with the taxation requirements applicable to other multi-state non-admitted insurance transactions.
Louisiana(5) Meets at least one of the following requirements:
1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $25,000 aggregate annual premium on all risks; or
3) Minimum 25 employees.
Tax of 5% (quarterly). §22:439(B).		 §23:1161 Not codified.
Definition in Bulletin 2011-01 is same as NRRA.
Maine(2) 1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $25,000 aggregate annual premium for insurance on all risks; and
3) Minimum 25 full-time employees.
3% (quarterly). Title 36, A §2531(2) and (3).
§2113(3) was repealed eff. July 21, 2011.		 §6701(6) § 2003(6); Bulletin 378 (June 17, 2011)
Same as NRRA.

Maryland		 1) Insurance procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant;
2) Minimum $100,000 aggregate annual premiums for insurance on all risks; or
3) Minimum 25 full-time employees.
3% (semi-annually). §4-210; 4-211(b)(1).		 §4-201(a) §3-301(d); Bulletin 11-26 (September 1, 2011)
Same as NRRA.

Massachusetts		 No. — § 175-168, § 175-224
Varies from NRRA.
“Large Commercial Policyholder” is defined as an insured that has aggregate property and casualty insurance premiums of $30,000 excluding workers’ compensation, certifies that it has elected to be treated as a Large Commercial Policyholders and meets 2 of the following criteria: (i) net worth of 10M, (ii) net revenue of sales of $5M, (iii) more than 25 employees per individual company or more than 50 employees per holding company aggregate; (iv) nonprofit or public entity with an annual budget or assets of $25M or more, (v) is a municipality with a population of 20,000 or more, or (vi) retains a risk manager who shall be a full-time employee or a person retained by the insured who shall either be (a) a certified insurance counselor, (b) a chartered property and casualty underwriter, (c) an associate in risk management, (d) a certified risk manager or (e) a licensed insurance advisor in property and casualty insurance.
Michigan(2) 1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 §500.4601(n) Not codified.

Minnesota		 No — §60A.196(e)
Same as NRRA.

Mississippi		 No — §83-21-23(2)(b); Bulletin 2011-1 (April 11, 2011)
Same as NRRA

Missouri		 1) Insurance (excluding life, health and annuity contracts) procured through full-time insurance manager or buyer, or an insurance producer whose services are wholly compensated by such insured and not by the insurer;
2) Minimum $100,000 aggregate annual premiums for insurance, excluding workers’ compensation premiums; and
3) Minimum 25 full-time employees.		 §375.786(1)(8) §384.015(5); Bulletin 11-05 (July 21, 2011)
Same as NRRA
Montana(2) 1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 §33-28-101(17) §33-2-318
Same as NRRA

Nebraska		 No. Repealed when NRRA was enacted. — §44-5502(5)(a)
Same as NRRA.
Nevada(6) 1) Minimum $1,000,000 aggregate annual property and casualty premiums (not including workers’ compensation or industrial insurance); and
2) Minimum 250 full-time employees.		 §680A.070(9) § 685A.032, § 685A.040
Same as NRRA, except insured may satisfy a condition for exemption if it is a city whose population is over 25,000 or a county whose population is over 20,000.

New Hampshire		 1) Insurance (excluding life and annuity contracts) procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant;
2) Minimum $15,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.
3% of gross premiums charged. §406-B:16(VI)(a)		 §406-B:16 VI Not codified, same as NRRA.

New Jersey		 (1) who procures the insurance of a risk by use of the services of a full time employee acting as an insurance manager or buyer;
(2) who has at least 25 full time employees; and
(3) whose aggregate annual premiums for insurance on all risks total at least $25,000.
Subject to taxes specific to captives under §17:47B-12.		 §17:47B-1 § 11:1-33.2, § 11:1-33.3
Same as NRRA.

New Mexico		 1) Insurance procured through full-time risk or insurance manager, or regularly and continuously qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.
May be subject to tax under § 7-40-1 et. seq.		 §59A-15-2(B)(5) §59A-14-2(F)
Same as NRRA.
New York(2) 1) Minimum $100 million net worth;
2) Member of a holding company system having minimum $100 million net worth; or
3) The metropolitan transportation authority and its statutory subsidiaries; or
4) A city with a population of one million or more.
Subject to captive franchise taxes under §7012.		 §7002(e) §2101(x)(2)
Same as NRRA.

North Carolina		 No — §58-21-16(b)(1)
Same as NRRA.
North Dakota  1) Insurance (excluding life and annuity contracts) procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 §26.1-02-05(9) §26.1-44-01.1(3)
Same as NRRA.

Ohio		 No — §3905.331
Same as NRRA.
Oklahoma(8) No §6470.2
§4202		 36 § 1106.1(B)
Same as NRRA.
Oregon No — § 735.405(b)
Same as NRRA, except the following standards are relaxed.
(A) The person possesses a net worth in excess of $10 million, as such amount is adjusted pursuant to section 7 of this 2011 Act. [reduced from $20 million](B) The person generates annual revenues in excess of $20 million, as such amount is adjusted pursuant to section 7 of this 2011 Act. [reduced from $50 million](C) The person employs more than 50 full-time or full-time equivalent employees for each insured or is a member of an affiliated group employing more than 100 employees in the aggregate. [Reduced from 500 and 1,000 respectively]

Pennsylvania		 An “industrial insured” is an insured:
1) Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained qualified insurance consultant;
2) Whose aggregate annual premiums for insurance on all risks total at least $25,000; and
3) Who has at least 25 full-time employees.		 40 P.S. § 46(e)(6) 40 P.S. § 991.1610
Same as NRRA.

Puerto Rico		 Subject to certain limited requirements, a surplus lines broker may place coverage for an “exempt commercial purchaser” as defined by the NRRA. — 26 L.P.R.A. § ‎‎1007a-1
Rhode Island(9) 1) Insurance procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums (excluding workers’ compensation and group); and
3) Minimum 25 full-time employees.
No information regarding taxes.
1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $25,000 aggregate annual premiums; and
3) Minimum 25 full-time employees.
Subject to taxes specific to captives under §27-43.9		 §27-16-1.2(a)(8)§27-43-1(6)
(Relates to Captives)		 § 27-3-38.
Same as NRRA.
South Carolina(9) 1) Insurance procured through full-time risk or insurance manager, or regularly and continuously qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 §38-25-150(8)
§38-90-10(16)		 § 38-45-10, § 38-45-90.
Same as NRRA.

South Dakota		 No — § 58-24-68
Varies from NRRA. The term “exempt commercial policyholder” means any person who applies for or procures any kind of property casualty insurance, except title or workers’ compensation insurance, through a risk manager, and meets at least two of the following qualifications.
(1) purchased the insurance with aggregate premiums in the sum of at least $100,000 during the most recent calendar year;
(2) minimum $10,000,000 net worth as reported in most recent financial statement, reviewed or audited by an independent certified public accountant;
(3) minimum $10,000,000 annual net revenues or net sales as reported in most recent financial statement, reviewed or audited by an independent certified public accountant;
(4) minimum 100 full-time employees, either individually or, if the policyholder is a member of an affiliated group, collectively with all members of the affiliated group;
(5) if a nonprofit organization, minimum $2,500,000 annual operating budget for most recent calendar or fiscal year, whichever applies;
(6) if a public entity, minimum $10,000,000 operating budget for most recent calendar or fiscal year, whichever applies; or
(7) if a municipality, minimum 20,000 population.
Tennessee(9) 1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 §56-2-105(7)
§56-13-102(12)		 § 56-14-102
Same as NRRA.

Texas(11)		 “Industrial insured” means a person who purchases commercial insurance and, at the time of placement:

(1) Employs or retains a qualified risk manager to negotiate insurance coverage; and

(2) either:

(A) has paid aggregate nationwide commercial property and casualty insurance premiums of more than $25,000 in the immediately preceding 12 months; or

(B) employs at least 25 full-time employees.

 § 981.0051, § 981.005, § 981.0033, § 981.004
Same as NRRA.
Utah(2) 1) Insurance procured through full-time risk manager or insurance manager, or regularly and continuously qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 §31A-37-102(16) Rule R590-171-3, Rule R590-171-6.
Same as NRRA.
Vermont(9) 1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 T.8 §3368(a)(6)
T.8 §6001(8)		 T.8 § 5024; Definition not codified.
However, Bulletin 163 references the federal definition as provided in 15 U.S.C. § 8206(5).
U.S. Virgin Islands(10) No — Not codified.
Virginia(7) 1) Insurance procured through full-time insurance manager or buyer or regularly and continuously retained licensed insurance consultant;
2) Minimum $100,000 aggregate annual premiums for insurance on all risks; (excluding life and annuity and accident and sickness);
3) Minimum 25 full-time employees; and
4) Minimum gross assets in excess of $3 million or annual gross revenues in excess of $5 million.		 §38.2-1039(D)(5) Not codified. However, Administrative Letter 2011-4 indicates that the Virginia General Assembly enacted House Bill 2286, which amended various provisions of the Surplus Lines and Insurance Law chapter (§§ 38.2-4800 et seq.) in accordance with provisions of NRRA effective as of July 1, 2011.

Washington		 No — § 48.15.010
Same as NRRA.
West Virginia(2) 1) Insurance procured through full-time insurance manager or buyer;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 §33-31-1(11) § 33-12C-3(9f)
Same as NRRA.

Wisconsin		 No — Not codified.

Wyoming		 1) Insurance procured through full-time insurance manager or buyer, or regularly and continuously retained qualified insurance consultant;
2) Minimum $25,000 aggregate annual premiums for insurance on all risks; and
3) Minimum 25 full-time employees.		 §26-12-101 § 26-11-104(c)
Same as NRRA.

(1)The Alaska legislature added language to its surplus lines laws in 2009 to extend the commercial policyholder exemption for surplus lines.

(2)“Industrial Insured” exemption recognized with respect to captive insurers only.

(3)“Industrial Insured” exemption recognized with respect to nonadmitted insurers only.

(4)“Industrial Insured” exemption also recognized in limited instances with respect to captive insurers (i.e., directors’ and officers’ liability insurance and bankers’ blanket bonds).

(5)“Industrial Insured” exemption recognized with respect to workers’ compensation insurance only.

(6)”Industrial Insured” exemption is restricted to excess liability insurance in excess of $25,000,000.

(7)”Industrial Insured” exemption only applies to an insured who filed an affidavit to the Executive Director of Insurance prior to July 1, 1999 establishing that it had satisfied the then existing criteria for obtaining that status.

(8)”Industrial Insured” exemption recognized with respect to life insurance only.

(9)”Industrial Insured” exemption also recognized with respect to captive insurers.

(10)”The Industrial Insured” exemption in USVI was repealed in 2008.

(11)”Industrial Insured” exemption in Texas only waives the diligent search requirement and only if (1) the agent placing the coverage discloses to the industrial insured  that (A) comparable insurance may be available from the admitted market that is subject to more regulatory oversight than the surplus lines market; and (B) a policy purchased in the admitted market may provide greater protection than the surplus lines insurance policy; (2) the surplus lines company offering the coverage has a financial strength rating of A- or better from A.M. Best; and (3) after receiving the notice described in Subd. (1) above, the industrial insured requests in writing that the agent procure the insurance from or place the insurance with an eligible surplus lines insurer.