General Information:

  1. Arizona maintains a list of eligible surplus lines insurers (see Other Comments section #1).
  2. Arizona does have a Surplus Lines Association (see Other Comments section #5).
  3. Arizona does maintain an Export List (see Other Comments section #6).
  4. Arizona does have an industrial insured exemption which generally follows the NRRA approach (see Appendix C).
  5. Surplus lines tax: Single-state risks: 3%, payable by broker plus stamping fee of 0.20% (semi-annually).
    Multi-state risks (quarterly)
  6. Arizona has not affiliated with any existing compact but has been authorized to participate in a tax sharing agreement (HB 2112 Laws 2011, Ch. 136) Effective: July 20, 2011. Unless Arizona enters into a compact or multistate agreement, Arizona shall retain 100% of the surplus lines premium tax for coverage provided to Arizona home-state insureds.
  7. Arizona does allow domestic surplus lines insurers in the state.

Eligibility and Filing Requirements (Alien Insurers Only):

Arizona may not prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance from an alien insurer on the IID List. The Arizona DOI added a link to its website which ties the Arizona eligibility list directly to the NAIC Quarterly List (see Other Comments section #1).

ARS § 20-413 provides that for an alien insurer to be placed on the AZ List of Qualified Unauthorized Insurers, a sponsoring surplus lines broker must submit to the Director a completed Certificate of Surplus Lines Broker (Section 1) and, Broker Affidavit (Section II) (SL Form 110 ed: 07/21/2011).

Eligibility and Filing Requirements (Foreign Insurers Only):

  1. Application must be filed by broker on or before June 1 of each year.
  2. Broker’s Sponsorship (through a licensed resident surplus lines broker).
  3. Sworn Statement that the broker has ascertained the financial condition of the insurer by completion of the ADOI SL Form 110 – Ed 7/21/2011.
  4. Certificate of Public Supervisory Official (ADOI SL Form 111 – Ed 07/21/2011, certifying capital and surplus).
  5. Report of Examination (certified).
  6. Annual Statement (certified).
  7. Certificate of Compliance.
  8. Capital and Surplus: $15 million.

Eligibility (Insurance Exchange only):

Trust Deposit: $2,500,000

Classes of Insurance Exempted from Surplus Lines Regulation:

  1. Ocean marine and foreign trade insurance.
  2. Insurance on subjects located, resident or to be performed wholly outside Arizona, or on vehicles or aircraft owned and principally garaged outside Arizona.
  3. Insurance on property or operations of railroads engaged in interstate commerce.

Other Comments or Requirements:

  1. Arizona eligibility list available at https://insurance.az.gov/insurers.
  2. Broker may rely on the information contained in the most recent NAIC Quarterly List of Alien Insurers as prima facie evidence of an alien insurer’s compliance.
  3. Brokers placing insurance on ocean marine & foreign trade, out-of-state risks, vehicles or aircraft owned and principally garaged outside Arizona, and railroads engaged in interstate commerce, must keep a record for not less than three years from the expiration or cancellation date of the insurance in the same detail as required for surplus lines insurance. The record must be kept available in Arizona for examination by the Director of Insurance.
  4. Surplus line tax exempt risks include:
    • Mexican auto insurance.
    • State of Arizona property and liability insurance.
    • Surplus line insurance purchased by federally recognized Indian tribes to cover risks on its own reservation.
  5. Contact information for the Surplus Lines Association of Arizona is as follows:
    J. Scott Wede, Executive Director
    Surplus Lines Association of Arizona
    14747 N. Northsight Boulevard
    Suite 111-449
    Scottsdale, AZ 85260
    Tel.: (602) 279-6344
    E-mail: swede@sla-az.org
  6. Arizona export list is available on the Arizona Surplus Lines Association filing systems (http://www.sla-az.org/) and on the ADOI website (https://insurance.az.gov/insurers).
  7. The Arizona Legislature has removed the compliance attestation from the required information a surplus lines broker must file with the Arizona Insurance Department to procure surplus lines insurance, if the insurance coverage is not a recognized surplus line. A surplus lines broker is also required to maintain evidence of compliance with ARS §20-407(A) for the duration of the policy plus 6 years after expiration date, if the coverage is not a recognized surplus line. A facsimile of a broker’s signature is allowed on the semi-annual statement to be submitted to the stamping office in lieu of the original. The broker must maintain the original notarized statement for 6 years after the calendar year in which the statement was filed.
  8. The Arizona legislature in 2016 enacted legislation which established a domestic surplus lines insurer (DSLI) in Arizona effective August 6, 2016.
  9. Arizona no longer requires surplus lines brokers to requalify the insurers they sponsor on an annual basis. Foreign surplus lines insurers now remain on the list of eligible surplus lines insurers until they request removal, a broker withdraws sponsorship, or if they no longer meet the financial requirements for capital, surplus, and/or deposits.
  10. Any policy and any evidence of surplus lines coverage that is issued by an unauthorized insurer and that is issued for delivery to the insured must contain a conspicuously stamped or written notice in bold faced type that states one of the following:
    “1.    The surplus lines policy or evidence of coverage is issued by a surplus lines insurer that is not a domestic surplus lines insurer:  Pursuant to section 20-401.01, subsection B, paragraph 1, Arizona Revised Statutes, this policy is issued by an insurer that does not possess a certificate of authority from the director of the Arizona Department of Insurance. If the insurer that issued this policy becomes insolvent, insureds or claimants will not be eligible for insurance guaranty fund protection pursuant to title 20, Arizona Revised Statutes.2.    The surplus lines policy or evidence of coverage is issued by a domestic surplus lines insurer:  if the insurer that issued this policy becomes insolvent, insureds or claimants will not be eligible for insurance guaranty fund protection pursuant to title 20, Arizona Revised Statutes.”