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Surplus Lines Broker License Info

Information about licensing requirements, how to apply for a license and FAQs. Vermont Law defines a Surplus Lines Broker to mean an individual who solicits, negotiates or procures a policy of insurance in an insurance company not licensed to transact business in this state which cannot be procured from insurers licensed to do business in this state. See Title 8, §4791.

License Requirements

In order to obtain a surplus lines insurance broker license an individual must be at least 18 years of age; must be deemed to be competent, trustworthy and financially responsible; possess a Vermont insurance producer license and submit a license application and fees.


How to Apply for A License

Resident and Nonresident - Electronic Application

Nonresident Surplus Lines Brokers MUST apply electronically using a third party vendor services listed below. (The site should open in a new window. To return to this page, close the new window.) Using NIPR to apply electronically, you will need to choose Resident or Nonresident Producer.  Once you are in the Application Process, you will then be prompted to make the choice of Surplus Lines Broker.

 

  • Complete the online application process and pay the relevant fees.
  • If your application is routine, and does not require any additional information, the license is generally issued within 48 hours.
  • If your application is not routine, you will be notified on-line that additional information must be submitted directly by you to the Department. All additional information that must be submitted is outlined on the application, and can be faxed to (802) 828-1633. Your license application will be reviewed after all required information has been received. 

Resident - Paper Application

An applicant must submit to the Department the following:

  1. NAIC Uniform Application for Individual Licensees (This application is used for ALL license types, though they are not all specified on the form); and
  2. A license application fee of $30.00 and a license fee of $400.00. Checks should be made payable to VT Dept. of Financial Regulation.

Attachment #1 Social Security Disclosure is for your information.

For further information about surplus lines insurance and the duties of surplus lines insurance broker duties please refer to Chapter 131,Title 8, §4807 and Chapter 138 of Title 8.

Surplus Lines Reporting Instructions and Forms


FAQs

What is a Surplus Lines Broker?

A Surplus Lines Insurance Broker is an individual who solicits, negotiates or procures a policy of insurance in an insurance company not licensed to transact business in this state which cannot be procured from insurers licensed to do business in this state. All transactions under the license shall be subject to the provisions of Title 8.

What is the license term?

The license term is April 1st to March 31st of even years.  The Department will send out renewal notices for existing licensees at the beginning of the even year.  Note, license fees are not prorated and the license term is fixed, regardless of the time of application.

Is a bond required?

No.

What are the conditions for placement of insurance in the surplus lines market?

In general, insurance coverage shall not be placed with a nonadmitted insurer unless the full amount of insurance required in not reasonably procurable from admitted insurers and the amount of insurance exported shall be only the excess over the amount procurable from an admitted carrier.  Note, Vermont doe not require evidence of three declinations.

What nonadmitted insurers are eligible for placement of insurance?

Surplus Lines Brokers shall not knowingly place or continue surplus lines insurance with nonadmitted carriers who are insolvent or unsound financially, and in no event shall any Surplus Lines Broker place any insurance with a nonadmitted insurer unless the Commissioner has deemed the nonadmitted insurer to be eligible for business in Vermont.  To obtain a  list of eligible nonadmitted insurers, you will need to use the Sircon Consumer Inquiry.  Choose Vermont then for Entity Type then choose Company.  For the Inquiry Type, choose Active Company List and then Company Type choose Surplus Lines.  All other areas you can leave blank.   

What are the record requirements of Surplus Lines Brokers?

1) Each Surplus Lines Broker shall keep in his or her office a full and true record of each surplus lines insurance contract covering a domestic risk placed by or through him or her with a surplus lines insurer, including a copy of the daily report, if any, and showing such of the following items as may be applicable:

2) Amount of the insurance and perils insured;

3) Brief description of property insured and its locations;

4) Gross premium charged;

5) Any return premium paid;

6) Rate of premium charged upon the several items of property;

7) Effective date of the contract, and its terms;

8) Name and post office address of the insured;

9) Name and post office address of the insurer;

10) Name and post office address of brokerage house, if applicable, and name of licensed individual producer with whom business was placed;

11) Amount collected from the insured; and

12) Other information as may be required by the commissioner.

The record of each contract shall be kept open to examination by the commissioner without notice until three years next following termination of the contract.

What are the reporting requirements of Surplus Lines Brokers?

On or before the end of each month next following each calendar quarter, each Surplus Lines Broker shall file with the commissioner a verified report of all surplus lines insurance transacted during the preceding calendar quarter.  The forms for submitting a report can be obtained at the bottom of this page under Attachments.

What is the surplus lines tax rate?

Gross premiums charged, less any return premiums, for surplus lines coverages placed with nonadmitted insurers are subject to a premium receipts tax of three percent, which shall be collected from the insured by the Surplus Lines Broker at the time of delivery of policy or other confirmation of insurance, in addition to the full amount of the gross premium charged by the insurer for the insurance. The tax on any portion of the premium unearned at termination of insurance shall be returned to the policyholder by the surplus lines broker. Nothing contained in this section will preclude a Surplus Lines Broker from charging a fee to the purchaser of the contract sufficient to recover the amount of this tax.

What are the tax-related duties of a Surplus Lines Broker?

At the time of filing his or her quarterly report with commissioner, each Surplus Lines Broker shall file a duplicate report and remit the premium tax due thereon to the Vermont Department of Taxes, Attn. Terry Edwards, 133 State Street, Montpelier Vermont 05609-1401.

Is a courtesy filing permitted in Vermont?

No. Under Vermont law any individual placing surplus line business for a Vermont home state exposure must be licensed in Vermont as a surplus lines broker. It is the responsibility of the surplus lines broker placing the exposure to remit the tax due. The practice of "courtesy Filings" arose years ago when Vermont did not issue licenses to nonresident surplus lines brokers. The law was amended in 2001 to allow for the licensure of nonresident surplus lines brokers. Accordingly, any individual placing surplus lines business for a Vermont home state exposure must obtain a Vermont surplus lines broker license.

Can a Surplus Lines Broker charge a fee?

A Surplus Lines Broker should not be charging a policy fee for service that is already paid for by the receipt of commission by the broker as part of the sale.  In instances where additional services are provided to the insured, a broker can charge a fee that is reasonable in relationship to the service provided.  Vermont law requires a broker to obtain a prior written agreement with a client, policyholder, or other member of the public concerning the fees or charges made by that broker for that broker procuring, servicing, or providing advice on insurance contracts.

Are fees taxable?

Policy fees or other broker charged fees are not considered premium and are not subject to premium tax.

 


For answers to additional questions that have not been addressed in the FAQs above, send an email to dfr.producerlicensing@state.vt.us please be sure to provide a telephone number where we can contact you.

Vermont Department of Financial Regulation
Insurance Division – Producer Licensing
89 Main Street
Montpelier, VT 05620-3101
(802) 828-3303 Telephone
(802) 828-1633 Fax