The Alaska Division of Insurance issued Bulletin 15-10, which outlines the Alaska diligent effort statute and common errors associated with compliance. The types of errors enumerated in the bulletin which must be discontinued include:

  • Using declinations from an admitted company that is not writing the particular kind or class of insurance required by the client.
  • Not identifying the class of business or type of risk and line of coverage when using the surplus lines placement list.
  • Incomplete documentation provided to the surplus lines broker.
  • Written documentation for declinations from admitted insurers that does not include the name of the insurance company, business location, phone number, name and position of the person contacted, date of contact, and adequate reason for the declination. In addition, the bulletin provides a revised affidavit of due diligence that may be used but is not required. It may be located at the Alaska Division of Insurance website at:

House Bill 372 eliminates fees, previously only applicable to alien insurers, required for inclusion on Alaska’s eligible surplus lines insurer list. The bill was signed by the Governor and became law on July 18, 2016.


House Bill 2149 established a domestic surplus lines insurer (DSLI) in Arizona effective August 6, 2016. The new legislation makes Arizona the 10th state to allow DSLIs, joining Arkansas, Delaware, Illinois, Louisiana, Missouri, New Hampshire, New Jersey, North Dakota and Oklahoma. This bill was enacted on March 17, 2016.

House Bill 2238 permits the sale of group identity theft insurance policies through authorized or unauthorized insurers. The bill also lays out requirements for cancellation and nonrenewal of the group policies that apply to both authorized and unauthorized policies. The bill became effective August 6, 2016.


Senate Bill 262 provides for regulation of transportation network companies. Surplus lines insurers under the legislation are permitted to write the required insurance coverage provided they have a credit rating of no less than “A-“ from A.M. Best or “A” from Demotech or similar rating from another rating agency recognized by the Department of Insurance. The bill was signed by the Governor and became law on August 10, 2016.


On January 5, 2016 the Florida Surplus Lines Service Office issued Bulletin 2016-01 announcing that all new and renewal policies or certificates with an effective date on or after April 1, 2016 will be subject to a reduced Florida service fee. The fee decreased from 0.175% to 0.15%.


House Bill 2262 sets minimum insurance requirements for large vehicles used for a purpose that requires a school bus driver permit, in connection with the operation of schools, day camps, summer camps or nursery schools or vans used for a profit ridesharing arrangement. Requirements may be sufficed with either a $2,000,000 combined single limit primary commercial automobile policy which must be provided by an admitted insurer, or a $1 million primary commercial automobile policy and a minimum $5 million excess or umbrella liability policy which may be provided by a surplus lines policy. This bill was signed by the Governor on July 22, 2016 and became effective on January 1, 2017.


Senate Bill 58 authorizes the use of an automobile guaranty “reimbursement insurance policy” that may be exported to a nonadmitted insurer by a licensed surplus lines broker. This bill was enacted on July 15, 2016.


House Bill 935 requires all insurers including surplus lines insurers, to provide notice to policyholders of changes that reduce coverages at renewal. This bill took effect on January 1, 2017.

House Bill 1133 grants new authority for the state fire marshal pertaining to enforcement and rulemaking authority related to amusement rides. The bill stipulates that after a hearing to determine availability in the admitted market, the fire marshal may determine that required insurance may be provided by the surplus lines insurers. This bill took effect on August 1, 2016.


In June 2016, the Maine Bureau of Insurance issued Bulletin 414, which superseded Bulletin 328 and outlines new restrictions for diligent effort requirements. The bulletin stipulates that a specific number of declinations does not necessarily constitute a fulfillment of the statutory diligent effort requirements.


House Bill 60 amends the surplus line agent licensing process to allow for electronic renewal of a license. Certificates of qualification for brokers now expire on the last day of the birth month of the licensee rather than on June 30 of the second year. This bill became effective on January 1, 2017.

House Bill 554 and Senate Bill 436 allow surplus lines insurers to provide non-renewable or extended short-term medical insurance with certain disclosures to the insured not to exceed six months. As part of the new law, short-term medical insurance policies issued by a nonadmitted insurance are limited to an eleven month period and does not allow the initial policy to be extended or renewed. Consistent with the general requirements for procuring surplus lines policies in Maryland, diligent effort and written notice to the insured must be followed; however, the law adds additional language to the required notice to insured when a nonadmitted insurer issues a short-term medical policy, including specific information regarding the Affordable Care Act and contact information for the Maryland Health Benefit Exchange. There are also specific limitations related to pre-existing conditions limitations. This bill took effect October 1, 2016.


In May 2016, the Michigan Department of Insurance and Financial Services issued Bulletin 2016-15-INS, which is intended to clarify the role of retail agents in the surplus lines transaction. The bulletin indicates that a surplus lines license is required as part of a surplus lines transaction, but it does not require the retail agent to hold the surplus lines license. The intent of this bulletin is to clarify that when working with a licensed surplus lines agent (wholesale broker or otherwise), a retail agent is not required to also hold a surplus lines license.


On January 19, 2016, the Surplus Lines Association of Minnesota approved a resolution and issued Bulletin 3 26 16 to reduce the stamping fee rate from .06% to .04% for all surplus lines transactions with an effective date on or after October 1, 2016.


Legislative Bill 837 eliminates the requirement to tax multistate risks at other states’ rates. Effective January 1, 2017, all surplus lines premium where Nebraska is the home state of the insured shall be taxed 100% at Nebraska’s rate of 3%. Although Nebraska did not participate in NIMA when it became operational, because it ultimately withdrew shortly after joining, it was one of five states that continued to tax multistate risks at multiple states’ rates, even though they retained 100% of the tax. This legislation also clarifies that taxes are only due on risks located within the U.S., and it revises the tax filing and payment dates to the first day of March, June, September, and December. This bill was enacted on April 7, 2016.


On June 10, 2016 the New York Department of Taxation and Finance issued two Advisory Opinions (TSB-A-16(4)C and TSB-A-16(5)C) that eligible surplus lines insurers are subject to franchise taxes on insurance companies and those taxes are not limited by NY Tax Law § 1505(a)(1). ELANY issued Bulletin No. 2016-17 noting that these opinions are consistent with previous opinions by this Department.


On November 18, 2015, the North Carolina Surplus Lines Association formally announced that North Carolina House Bill 262 authorized the creation of a North Carolina Stamping Office, making it the 15th stamping office in the nation. The announcement included a timeline for Stamping Office Implementation, but clarified that current licensing and filing requirements will remain in effect, utilizing the existing Department of Insurance system until the Stamping Office System is available for use.


HB 7842 allows private flood insurance to be written by a surplus lines insurer without a due diligence affidavit. This bill became effective July 1, 2016.


House Bill 4660 allows surplus lines brokers to act as a limited lines or special producer without being required to be appointed by the surplus lines insurer. This bill became effective on March 2, 2016.


The Utah Insurance Department issued Bulletin 2016-3 which confirmed that effective October 1, 2016, upon the dissolution of NIMA, when Utah is the home state, 100% of the risk shall be taxed at the Utah state rate, regardless of where the risk resides. The bulletin indicated that all single and multistate premium should be paid and reported through the Surplus Line Association of Utah, and assessed the appropriate stamping fee.


Terrorism Risk Insurance Act (TRIA)

The next reauthorization of TRIA is not expected until 2020. In the meantime, the Federal Information Office (FIO) is collecting terrorism data for purposes of issuing annual reports to Congress. Starting in 2017, responses to this terrorism data call will be mandatory. In July 2016, the National Association of Insurance Commissioners (NAIC) also issued a call for terrorism-related data through the New York Department of Financial Services as the lead state, joined by all remaining states and the District of Columbia.

In June 2016, the FIO released its Report on the Overall Effectiveness of the Terrorism Risk Insurance Program. Although the report states that the limited time they had to issue a report from the initial reauthorization resulted in limited responsive data, based on the data submitted voluntarily in 2016, FIO believes the continued existence of the Program serves to ensure that comprehensive terrorism risk coverage is available and affordable and that there is not evidence that this coverage would be more available in the absence of the Program.

The Foreign Account Tax Compliance Act (FATCA)

FATCA provides IRS reporting requirements directed at foreign financial institutions and financial intermediaries in an effort to prevent tax evasion by U.S. citizens, U.S. residents and corporations through the use of offshore accounts. FATCA may apply to U.S. source insurance premiums to the extent such premiums are classified as “withholdable payments.” During 2016, there were potential efforts to take legislative action to exempt the property and casualty industry from FATCA; however, there have been no such legislative exemptions enacted to date.

National Association of Registered Agents and Brokers (NARAB)

As part of the TRIA reauthorization, NARAB also became law on January 12, 2015. The insurance industry lobbied many years for NARAB in an effort to streamline the licensing process for agents and brokers nationwide and eliminate burdensome multistate requirements while preserving important state regulatory authority and consumer protections.

10 of the 13 inaugural members of the NARAB board have now been nominated by the President. The nominees are eligible for a “fast-track” confirmation process in the Senate Banking Committee’s Executive Calendar.

The three remaining board members to be nominated will be Commissioners, or possibly former Commissioners. Once approved, these ten nominees would constitute a quorum, thereby enabling NARAB to start fulfilling its mission. NARAB will be based in Washington, DC as a nonprofit corporation and regulatory agency with authority to issue multistate licenses to agents and brokers. After becoming licensed in one’s home state, agents and brokers can obtain a nationwide license by becoming “members” of NARAB.