Taming Those Pesky Surplus Lines Taxes and Fees

Surplus Lines taxes and fees can be admittedly confusing. Regardless of the potential confusion, state insurance regulations require we identify these taxes and fees on our surplus lines quotes and do so accurately.

There is a particular scenario that producers need to watch out for in this regard. It is standard for surplus lines brokers to provide a breakdown of the fees and taxes on their quotes. However, they often do not provide the tax figures for the Terrorism Coverage (TRIA) option. If they do not, it is up to the producer to manually figure out the tax amounts for the premium option that includes the Terrorism Coverage.

To do this, add the Terrorism Coverage premium to the base premium and then multiply that figure by your state’s surplus lines tax rate. This will give you the Surplus Lines tax amount for the premium with TRIA. If you are in a state with stamping fees, you will have to do the same thing for the stamping fee.

Now after you have done all that math, don’t forget to put it on your quote!