General Information:

  1. California does maintain a List of Approved Surplus Lines Insurers (LASLI) (http://www.insurance.ca.gov/01-consumers/120-company/07-lasli/lasli.cfm). The LASLI is a voluntary list of nonadmitted insurers that the California Department of Insurance (CDI) has approved for use by surplus line brokers for placement of risks when California is the home state of the insured.
  2. California does have a Surplus Line Association (http://www.slacal.com) (also see Other Comments section #14).
  3. California does maintain an Export List (see Other Comments section #4) (http://www.slacal.com/brokers/export-list).
  4. California does have an industrial insured exemption (see Appendix C).
  5. California recognizes an exempt commercial purchaser (called “commercial insured” in California) under California Insurance Code Sections 1760.1(b) and 1763(h).
  6. Surplus lines tax/Stamping Fee:  3.0% payable by broker to the CDI; stamping fee of 0.18% (effective Jan. 1, 2023), payable by broker to The Surplus Line Association of California (SLA).
  7. California has not affiliated with any existing compact but has adopted legislation allowing it to keep 100% of surplus lines premium tax where California is the insured’s home state (California Insurance Code Section 1775.5(b)). Also see California Insurance Code Section 1760.1(e)).
  8. California law does not authorize domestic California surplus lines insurers.
  9. California does not allow for underwriting activities or management functions on behalf of a surplus lines insurer to occur physically within the state, see Bulletin 96-4 (May 30, 1996)

Eligibility Requirements For Insurers Qualifying Under NRRA:

Effective July 21, 2011, the provisions of the NRRA have been incorporated into California Insurance Code Section 1765.1 such that a broker may place surplus line insurance for California home state insureds with:

  • Any Foreign (U.S.-domiciled) insurer provided that the insurer has met the following requirements at the time of placement: (1) the insurer is licensed to write the type of insurance in its domiciliary jurisdiction, and (2) it has at least $45 million in capital and surplus.
  • Any Alien (non-U.S.-domiciled) insurer that is listed on the Quarterly Listing of Alien Insurers maintained by the NAIC International Insurers Department and licensed as an insurer in its domiciliary jurisdiction.

Surplus line brokers who make placements with non-admitted insurers under California Insurance Code Section 1765.1 are responsible for determining the eligibility of these insurers at the time of placement.

Eligibility and Filing Requirements for Nonadmitted Insurers Approved on the LASLI:

In California, nonadmitted insurers may also voluntarily seek to be placed on the LASLI maintained by the CDI. This is an optional listing and insurers need not be on the LASLI to be used for surplus line placements. Both foreign and alien nonadmitted insurers may be included on the LASLI provided the insurers satisfy the standards set forth in California Insurance Code Section 1765.2. Nonadmitted insurers on the LASLI must demonstrate to the State of California their financial stability, reputation and integrity, as well as adhering to specific capitalization, investment and solvency standards established under the California Insurance Code Section 1765.2. Refer to the California LASLI Filing Requirements Guide for Surplus Line Insurers on the California Surplus Line Association’s website for details regarding current California eligibility and filing requirements for surplus lines insurers (http://www.slacal.com/insurers/lasli-insurer-filing-information/insurer-filing-requirements).

  1. Capital and Surplus: $45,000,000, see California Insurance Code Section 1765.2 for additional information.
  2. Seasoning: 3 years of prior operating history.
  3. Surplus Line Contact Broker: must be a California-licensed surplus line broker.
  4. Filing Fee: $6,724(initial application), $3,363 (subsequent annual renewal), $375 (per type of updated financial documents), $55 (per type of updated non-financial documents), and $55 (per type of updated supplementary information).
  5. Annual Financial Statement: certified, in U.S. Dollars, not older than 12 months.
  6. Quarterly Financial Statement: verified.
  7. Report of Examination: certified
  8. Trust Agreement (alien insurers only): certified.
  9. Quarterly Statement of Trust Asset Account (alien insurers only): verified.
  10. Audited Financial Report: certified, no older than 12 months.
  11. License or Certificate of Authority: certified.
  12. Certificate of Compliance or Certificate of Good Standing (or other equivalent certificate) from domiciliary regulator or from a licensed state.
  13. Market Conduct Report: certified or verified.
  14. Regulatory Disclosure Statement: verified.
  15. Plan of Operation which outlines the proposed products in California, among other requirements.
  16. Principal Place of Business.
  17. Appointment of Agent for Service of Process in California.
  18. Biographical Affidavits of insurer’s officers and directors.
  19. List of California Surplus Lines Brokers authorized to issue policies on behalf of the insurer.
  20. Any additional information or documentation required by the Commissioner which is relevant to the financial stability, reputation, and integrity of the non-admitted insurer.

NOTE:  If any of the documents required under California Insurance Code Section 1765.2 are available from the NAIC or other public source, the insurer does not need to file those documents with the CDI.  If hard copies of the documents are filed, for LASLI applicants, the documents must be filed in duplicate (one original and one photocopy) with the CDI Corporate Affairs Bureau (CAB) in Oakland.  For current LASLI companies, only one original copy is required and continues to be filed with the Accounting Services Bureau in Sacramento.  However, for both LASLI applicants and current LASLI companies, Biographical Affidavits must be filed in triplicate (one original and two photocopies).  Though insurers may continue to file by hard copy, the CDI accepts original LASLI applications, annual renewals and updates electronically through the CDI LASLI portal.  To access the portal go to:

https://lasliportal.insurance.ca.gov/ ‎

Refer to the California LASLI Filing Requirements Guide for ‎Surplus Line Insurers on the California Surplus Line ‎Associations website for details regarding California eligibility and filing requirements for surplus line insurers. (http://www.slacal.com/insurers/lasli-insurer-filing-information/insurer-filing-requirements).

Types of Insurance Exempted from Surplus Lines Laws and Regulations:

The types of insurance listed below are exempt from California surplus lines laws limiting the insurance that may be placed with nonadmitted insurers and requiring any report thereof and regulations per California Insurance Code Section 1760.5. Types #1, #3 and #4 must be placed by and through a California licensed special lines’ surplus line broker.

  1. Insurance against perils of navigation, transit or transportation upon hulls, freights or disbursements, or other ship owner interests; upon goods, wares, merchandise and all other personal property and interests therein, in the course of exportation from or importation into any country, or transportation coastwise, including transportation by land or water from point of origin to final destination and including war risks; and marine builder’s risks, dry docks and marine railways, including insurance of ship repairer’s liability, and protection and indemnity insurance, but excluding insurance covering bridges or tunnels.
  2. Reinsurance of the liability of an admitted insurer.
  3. Insurance on property or operations of railroads engaged in interstate commerce.
  4. Aircraft or spacecraft insurance.

Other Comments or Requirements:

  1. Effective July 21, 2011, when California is the insured’s home state, California is the only state (1) where the broker needs to be a licensed surplus line broker; (2) to regulate the nonadmitted placement (such as the diligent search requirement); and (3) to require the payment of premium tax for nonadmitted insurance (i.e. 100% of the gross premium).
  2. The California Insurance Code Section 1764(a) allows a licensed California surplus line broker to issue policies for home state insureds, in addition to other evidence of insurance (such as certificates) on behalf of eligible nonadmitted insurer(s), provided prior written authority has been granted by the insurer(s). California Insurance Code Section 1765.2(c)(8) requires that the insurer provide a list to the CDI of these surplus lines brokers and any additions or deletions to that list.
  3. California Insurance Code Section 1763(h)(1) exempts brokers from conducting a diligent search of the admitted market if the broker is placing nonadmitted insurance for a California home state commercial insured as defined by California Insurance Code Section 1760.1(b) and the following occurs:
    • The surplus line broker procuring or placing the surplus lines insurance has disclosed in writing to the commercial insured that surplus insurance may or may not be available from the admitted market that may provide greater protection and regulatory oversight, and
    • The commercial insured has subsequently requested in writing that the surplus line broker procure or place surplus line insurance from a nonadmitted insurer.
  4. Coverages and risks that are on the “Export List” may be placed in the surplus line market without a diligent search.
  5. California Insurance Code Section 1620(b)(2) exempts eligible surplus line insurers from filing a bond with the courts before the insurers initiate or defend a lawsuit filed against them.
  6. California Insurance Code Section 1765.1(f)(1) permits insurance to be placed, on a limited basis, with nonadmitted insurers not eligible under 1765.1 if certain conditions are met (refer to the Code Section for specifics).
  7. California Insurance Code Section 1773 permits surplus line brokers to advertise and solicit in any advertising or marketing medium; these advertisements may include the name of specific nonadmitted insurers as well as the nonadmitted insurance products available, as long as:
    • the nonadmitted insurer is authorized to accept placements from the surplus line broker pursuant to California Insurance Code Section 1765.1;
    • the nonadmitted insurer’s name is not used in connection with any of its own nonadmitted insurance products;
    • the insurer’s unlicensed status, and the nonadmitted status of the insurance products are disclosed in the ad in type no smaller than any telephone or fax number or address shown in the ad;
    • the ad does not contain any knowingly (or that should have been known) false or misleading information; and
    • the ad does not contain any information about premiums or rates.
    Note: For eligible nonadmitted insurers that are members of groups of insurers, the law allows surplus line brokers and special lines’ surplus line brokers to include the name of the group in their advertising.
  8. California Insurance Code Section 1760.5(h) permits special lines’ surplus line brokers to advertise and solicit business in the same manner as surplus line brokers, except that special lines’ surplus line brokers are not limited to advertise or solicit with only eligible surplus line insurers pursuant to Insurance Code Section 1765.1.
  9. Insurance Code Section 703.1(a) permits any eligible surplus line insurer pursuant to California Insurance Code Section 1765.1 to advertise in all media, provided all of the following apply:
    • his/her unlicensed status is disclosed;
    • the ad is truthful;
    • the ad does not discuss premiums or rates; and
    • specific products are not mentioned in media of general circulation. The prohibition against advertising specific products in “media of general circulation” does not extend to advertising in insurance trade press as well as other trade, industry and special interest publications.
  10. For nonadmitted companies not eligible pursuant to California Insurance Code section 1765.1, advertising is permitted in any media except media targeted primarily at California insureds or prospective insureds, as long as they meet the standards set forth in California Insurance Code Section 703.1(a) and do not advertise any information about a specific product.
  11. California Insurance Code Section 1639(c) permits a non-resident license to be issued to a surplus line broker and a special lines’ surplus line broker if the non-resident broker holds that type of license in the state or territory of the U.S. where the resident license is maintained. California Insurance Code Section 1768(d) requires non-resident surplus line brokers to keep in the state where he or she is licensed complete records of the business transacted by him or her for California home state insureds with nonadmitted insurers under his or her California non-resident surplus line broker license.
  12. California Insurance Code Section 1763(g) allows brokers to extend existing surplus lines policies by 90-days in the aggregate during a rolling twelve month period without having to file a Confidential Report of Surplus Line Placement (SL-1) and a Diligent Search Report (SL-2) with the SLA. This policy extension does not allow any changes in coverage, terms, conditions or limits, however. Any additional premium charged for the extension is determined pro rata, based on the same rate of premium as the existing surplus line policy.
  13. California requires every applicant for a surplus line broker business entity license to provide names of all persons who may exercise the power and perform the duties under the license. In addition, whenever a surplus line broker licensed as an organization desires to change the persons who are authorized to transact business under the license, it shall immediately file an application with the CDI reflecting the change. The legislation requires all natural persons named to take and pass both the property broker-agent and casualty broker-agent qualifying examinations, and become individually licensed as a surplus line broker. Also, surplus line brokers who are only transacting on behalf of a licensed surplus line broker organization are not required to file a $50,000 surplus lines bond. However, all other surplus line brokers who are also placing surplus lines business through their individual license, must still comply with the $50,000 bond requirement. Refer to California Insurance Code sections 1656, 1661, 1679. 1765(c) for specifics.
  14. Contact information for the SLA is as follows:
    Benjamin McKay, J.D., M.P.A.,
    Chief Executive Officer and Executive Director
    The Surplus Line Association of California
    12667 Alcosta Boulevard, Suite 450
    San Ramon, CA 94583
    Tel.: (415) 434-4900
    Fax.: (415) 434-3117
    E-mail: [email protected]
  15. California Insurance Code Section 1761(b) authorizes a nonadmitted insurer that is affiliated with a California domestic insurer to have common directors provided these common directors do not constitute the majority of the voting authority of the nonadmitted insurer and to receive certain administrative services rendered in California by its domestic affiliate (refer to the Code Section for specifics).
  16. California Insurance Code section 1764.1 requires a specific disclosure statement to be provided to and signed by the insured at the time the producer accepts an application for an insurance policy issued by a nonadmitted insurer, other than a renewal of that policy. This disclosure is provided on a form referred to as either the D-1 or the D-2 freestanding disclosure statement (see below for the form). The difference between the D-1 and D-2 forms is that the D-1 is submitted when the applicant is applying for insurance with a nonadmitted insurer, the insured’s signature is required, and the words “are applying to purchase” are included in the form. The D-2 includes the words “have purchased” and is attached to the policy after it has been issued. The disclosure statements must be printed in 16-point bold type. The agent, broker, or surplus line broker who received the originally signed disclosure statements from the insured must maintain the original in his or her records for a period of at least five years after expiration or cancellation date of the policy and send copies of the disclosure statements to all agents, brokers, or surplus line brokers involved in the transaction. These records are available to the commissioner and the insured upon request.
    Form D-1/D-2:“IMPORTANT NOTICE:

    1. The insurance policy that you [have purchased] [are applying to purchase] is being issued by an insurer that is not licensed by the State of California. These companies are called “nonadmitted” or “surplus line” insurers.
    2. The insurer is not subject to the financial solvency regulation and enforcement that apply to California licensed insurers.
    3. The insurer does not participate in any of the insurance guarantee funds created by California law. Therefore, these funds will not pay your claims or protect your assets if the insurer becomes insolvent and is unable to make payments as promised.
    4. The insurer should be licensed either as a foreign insurer in another state in the United States or as a non-United States (alien) insurer. You should ask questions of your insurance agent, broker, or “surplus line” broker or contact the California Department of Insurance at the toll-free number 1-800-927-4357 or internet website www.insurance.ca.gov. Ask whether or not the insurer is licensed as a foreign or non-United States (alien) insurer and for additional information about the insurer. You may also visit the NAIC’s internet website at www.naic.org. The NAIC—the National Association of Insurance Commissioners—is the regulatory support organization created and governed by the chief insurance regulators in the United States.
    5. Foreign insurers should be licensed by a state in the United States and you may contact that state’s department of insurance to obtain more information about that insurer. You can find a link to each state from this NAIC internet website: https://naic.org/state_web_map.htm.
    6. For non-United States (alien) insurers, the insurer should be licensed by a country outside of the United States and should be on the NAIC’s International Insurers Department (IID) listing of approved nonadmitted non-United States insurers. Ask your agent, broker, or “surplus line” broker to obtain more information about that insurer.
    7. California maintains a “List of Approved Surplus Line Insurers (LASLI).” Ask your agent or broker if the insurer is on that list, or view that list at the internet website of the California Department of Insurance: insurance.ca.gov/01-consumers/120-company/07-lasli/lasli.cfm.
    8. If you, as the applicant, required that the insurance policy you have purchased be effective immediately, either because existing coverage was going to lapse within two business days or because you were required to have coverage within two business days, and you did not receive this disclosure form and a request for your signature until after coverage became effective, you have the right to cancel this policy within five days of receiving this disclosure. If you cancel coverage, the premium will be prorated and any broker’s fee charged for this insurance will be returned to you.”


    Date: ______________
    Insured: ____________

  17. Every policy issued by a nonadmitted insurer and every certificate evidencing the placement of insurance must contain or have affixed on its front by the insurer or surplus line broker the D-2 disclosure statement, in 16-point bold type, which contains substantially the same wording as the D-1 statement above but does not require a signature by the insured.
  18. California Insurance Code Sections 1763.2 and 1764.1(a)(1) permit surplus line brokers to rely upon a signed D-1 disclosure statement obtained by another licensee involved in the transaction as evidence that it was obtained from the insured but only “if it is reasonable under all the circumstances to do so”.
  19. The D-1 disclosure statement is not needed if the broker has determined that the policy is being issued to an industrial insured (see Insurance Code Section 1764.1(c) for details). However, the D-2 disclosure statement must be affixed to the policy provided to the insured.
  20. The California Legislature enacted legislation in 2014 which exempts insurers whose insureds have accepted earthquake coverage that does not meet the minimum coverage requirement but has been approved by the insurance commissioner from being required to offer earthquake coverage with minimum requirements at the renewal. This exemption would apply provided the insured has been offered a renewal and received written notice regarding available earthquake coverage.
  21. The California Legislature enacted legislation in 2014 regarding insurers’ responsibilities to policyholders in regards to specified residential property, private passenger automobile policies of at least six months’ duration, and individual disability income policies taking effect or renewed on or after January 1, 2016. The legislation provides that insurers must maintain a process allowing a policyholder to designate one additional person to receive notice of lapse, termination, expiration, nonrenewal or cancelation of a policy for nonpayment of premium; requires that insurers must notify insureds in writing or by electronic transmission of that right at the time of application or within 30 days of the inception date and every two years thereafter; or requires that the insurer follow a legally prescribed process as detailed within the law if it fails to follow the process previously described. This process includes: notifying the policyholder of the right to designate one third party to receive notifications as detailed above; maintain records of designee information for the life of the policy; and notify the policyholder every two years of the right to update designee information or make a designation; the insurer may presume this right has been waived if no response is received within 30 days. The law prohibits a policy subject to the law’s requirements from being canceled for nonpayment of premium unless the designated third party has been notified by first-class mail at least 10 days prior to the cancellation date. The law specifies that the designee does not acquire any substantive rights to the policy.
  22. On November 03, 2020, California enacted Proposition 22, which requires “App-Based Transportation Companies” to provide their drivers certain accident and disability insurance coverages. In response, CDI issued a February 03, 2021 Notice ‎for “Implementation of Insurance Provisions of ‎Proposition 22,” ‎ authorizing surplus lines insurers to provide certain coverages to “App-Based Transportation Companies” on a group basis.
  23. Effective January 1, 2023, surplus lines brokers are required to include their license number on emails involving an activity for which a person must hold a surplus lines license.  The license number must be in a type size that is no smaller than the largest of any street address, email address, or telephone number of the surplus lines broker, see California Insurance Code Section 1725.5.