- Delaware does not maintain a list of eligible surplus lines insurers.
- Delaware does not have a Surplus Lines Association.
- Delaware does not have an Export List.
- Delaware does have an industrial insured exemption with respect to captive insurers only (see Appendix C) but otherwise recognizes the exempt commercial policyholder exemption under NRRA.
- Surplus lines tax: 3%.
- Delaware has not affiliated with any existing compact but Commissioner has been authorized to enter into an interstate cooperative agreement, reciprocal agreement, or compact (SB 109) Effective: July 21, 2011.
- Delaware does allow domestic surplus lines insurers in the state.
Eligibility and Filing Requirements (Alien Insurers Only):
- Brokers may place insurance with alien insurers that are listed on the Quarterly Listing of Alien Insurers maintained by the NAIC. § 193(a).
Eligibility and Filing Requirements (Foreign Insurers Only):
- A surplus lines broker may not place coverage with a nonadmitted foreign insurer unless, at the time of placement, the nonadmitted insurer possesses capital and surplus, or its equivalent under the laws of its domiciliary jurisdiction that equals the greater of the minimum capital and surplus requirements under the laws of Delaware or $15 million. Delaware does not impose a licensure eligibility requirement.
- The commissioner may waive the minimum capital and surplus requirement for a nonadmitted insurer if the commissioner 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. §1931(a).
Types of Insurance Exempted from Surplus Lines Regulation:
- Wet marine and transportation insurance (see Other Comments section #3).
- Insurance on subjects located, resident or to be performed wholly outside Delaware or on vehicles or aircraft owned and principally garaged outside Delaware.
- Insurance on operations of railroads engaged in transportation in interstate commerce and their property used in such operations.
- Insurance of aircraft owned or operated by manufacturers of aircraft or of aircraft operated in commercial interstate flight or cargo of such aircraft or against liability, other than workers’ compensation and employers’ liability, arising out of ownership, maintenance or use of such aircraft.
Other Comments or Requirements
- Business entities cannot transact surplus lines business, only individual brokers. Tax reports must be made by (or on behalf of) individual surplus lines brokers. Agencies should NOT make tax filings.
- There is a 5% tax on wet marine and transportation insurance.
- The Delaware Nonadmitted Insurance Act [SB 109], enacted in 2011, created a new category of insurance company, referred to as a Delaware “Domestic Surplus Lines Insurer”. This insurer category differs from others in that it allows a Delaware-domiciled insurer to be treated as nonadmitted in Delaware for particular business purposes. A Delaware domestic surplus lines insurer will be domiciled and admitted in Delaware but, unlike all other Delaware-domiciled insurers, can write surplus lines policies in Delaware.
- Every insurance contract procured and delivered as surplus lines coverage pursuant to this law shall have stamped or printed upon it, initialed by and bearing the name of the individual surplus lines broker who procured it, the following disclosure statement:”This insurance contract is issued pursuant to the Delaware Insurance Laws by an insurer neither licensed by nor under the jurisdiction of the Delaware Insurance Department. This insurer does not participate in insurance guaranty funds created by state law. In the event of the insolvency of the surplus lines insurer, losses will not be paid by the state insurance guaranty fund.”
- The Delaware DOI issued a clarifying Bulletin in 2014 regarding the Statement of Surplus Lines Diligent Effort Form SL-1923. It continues to be the responsibility of the surplus lines broker to retain the SL-1923 in his or her files. However, the main purpose of the Bulletin is to highlight a requirement that to be a valid affidavit it must be notarized. The SL-1923 form was changed in 2013 to add a notary signature in accordance with specific Delaware legal requirements.
- Delaware enacted Legislation in 2017 which increases filing fees for the initial registration and annual continuation for surplus lines insurers to $150, increases initial filing fees for brokers to $250, and increases resident and nonresident broker renewal fees to $200.