Arkansas Surplus Lines key terms

Coverage written by an eligible nonadmitted insurer for a risk that admitted insurers in the state are unwilling or unable to insure, obtained only after the required diligent search of the admitted market.

A producer licensed under Arkansas law to negotiate and place insurance with nonadmitted insurers on behalf of insureds whose risks cannot be placed in the admitted market.

The separate authority issued by the Arkansas Insurance Department that allows a licensed producer to transact surplus lines business, in addition to the producer's property and casualty authority.

An insurer that is not authorized by the Arkansas Insurance Department to transact insurance in the state, but which may lawfully write surplus lines if it meets eligibility standards.

A nonadmitted insurer that satisfies Arkansas eligibility requirements, such as minimum capital and surplus and a satisfactory record, and may therefore be used by surplus lines brokers.

An insurer transacting insurance in Arkansas without the authority required by law; dealing with one outside permitted surplus lines channels can expose the producer and insured to penalties.

The documented effort a surplus lines broker must make to obtain coverage from admitted insurers before placing a risk with a nonadmitted insurer, usually shown by declinations from authorized carriers.

A written or recorded refusal by an admitted insurer to write a risk, which serves as evidence of the diligent search required before surplus lines placement.

A signed statement by the broker or insured confirming that the risk was declined by admitted insurers and qualifies for placement with a nonadmitted insurer.

A tax imposed on surplus lines premiums written in Arkansas, collected by the surplus lines broker and remitted to the state, often in place of the premium tax paid by admitted insurers.

The periodic report and payment a surplus lines broker submits to the Arkansas Insurance Department showing surplus lines premiums written and the tax due.

The required schedule on which surplus lines brokers report and remit premium tax and policy information for surplus lines business written during each calendar quarter.

A year-end report comparing tax and premium amounts reported during the year with the broker's actual surplus lines records, used to correct discrepancies and confirm total liability.

A surety bond required as a condition of surplus lines licensure, guaranteeing faithful performance and payment of premium taxes and obligations to insureds.

The legal obligation of a surplus lines broker to hold premiums and funds belonging to insureds or insurers in trust and to handle them honestly and accurately.

A separate bank account in which a producer or surplus lines broker deposits premiums received from insureds before remitting them to insurers or other parties.

Mixing client or insurer funds with the producer's own operating money in a single account, which is generally prohibited for premiums held in trust.

The authorization granted by the Arkansas Insurance Department allowing a person to sell, solicit, or negotiate insurance, which must be held before surplus lines authority can be added.

Required ongoing coursework that Arkansas producers and surplus lines brokers must complete during each licensing period to keep their licenses active.

The periodic process by which a producer or surplus lines broker applies to continue licensure, including payment of fees and proof of continuing education compliance.

A process allowing a producer licensed in another state to obtain an Arkansas nonresident license, including surplus lines authority where eligible, based on the home state license.

A surplus lines broker licensed in another state who obtains authority to place Arkansas surplus lines risks, typically through reciprocity and compliance with Arkansas filing rules.

An insurer organized under the laws of a foreign country rather than a U.S. state, which must meet additional eligibility standards to write surplus lines in Arkansas.

A rule that certain nonadmitted alien insurers maintain a trust fund in the United States for the benefit of U.S. policyholders as a condition of eligibility.

The financial threshold an insurer must maintain to qualify as an eligible surplus lines insurer in Arkansas, ensuring it can meet policyholder obligations.

Documentation issued or accepted by the Arkansas Insurance Department confirming that a nonadmitted insurer meets the standards to write surplus lines business in the state.

The broker's check, before placement, that the nonadmitted insurer appears on the current approved or eligible list and is in good standing.

The act of placing insurance with an insurer not authorized to transact business in Arkansas outside lawful surplus lines channels, which can trigger penalties for producers.

A required notice informing the insured that the policy is written by a nonadmitted insurer not protected by the state guaranty fund and not subject to full state regulation.

The rule that claims against insolvent nonadmitted insurers are generally not covered by the state insurance guaranty association, a fact that must be disclosed to insureds.

A separately stated charge a surplus lines broker may add to a surplus lines policy to cover administrative costs, subject to Arkansas limits and disclosure rules.

The protection that keeps a surplus lines broker's diligent search documentation and declinations confidential and shielded from public disclosure or discovery in most circumstances.

The process of arranging coverage with an eligible nonadmitted insurer after confirming the risk is not available from admitted carriers and completing required disclosures and filings.

The official who heads the Arkansas Insurance Department and enforces insurance laws, including licensing, market conduct, and surplus lines regulation.

The state agency that regulates insurers and producers, issues surplus lines licenses, maintains eligibility lists, and collects surplus lines premium tax filings.

A regulatory review of an insurer's or producer's business practices, such as underwriting, claims, and surplus lines compliance, to ensure adherence to state law.

A monetary fine or other sanction the Insurance Commissioner may impose on a producer or insurer for violating Arkansas insurance laws or surplus lines rules.