Surplus Lines Broker Licensing and Regulation (Georgia)
This domain tests Georgia's rules for who may act as a surplus lines broker and how a nonadmitted placement must be licensed, documented, disclosed, taxed, and recorded. Expect questions on licensing eligibility, the diligent-effort standard, eligible insurers, the borrower's disclosure duty, premium tax, and recordkeeping.
Licensing authority
- A Georgia surplus lines broker license issued by the Commissioner is required. A regular agent or broker license does not authorize placing business with nonadmitted insurers.
- Nonresidents holding a surplus lines license in good standing in their home state may obtain a Georgia nonresident license; Georgia does not re-examine a qualified nonresident.
- The license carries a surety bond, continuing-education, and Commissioner-inquiry obligations. Lapse means every nonadmitted placement is unauthorized.
The placement test
- Surplus lines is available only when the full amount of coverage cannot be procured from authorized insurers.
- The broker must make and document a diligent effort: insurers contacted, dates, limits and coverages requested, and each refusal. A file showing three documented declinations is the common benchmark, but the real test is a genuine search, not a ritual count.
- Price alone is never a reason. If an admitted insurer will write the risk at a higher premium, the risk belongs in the admitted market.
- Under NRRA, an exempt commercial purchaser with a qualified risk manager may be placed without a diligent search.
Eligible insurers
- The Commissioner maintains a list of eligible surplus lines insurers meeting capital, surplus, and (for aliens) U.S. trust-fund standards.
- Placing with a nonadmitted insurer not on that list is a violation even if the insurer is solvent and pays claims.
Disclosure to the insured
- Before or at binding, the broker must give written notice that the insurer is not admitted, is not subject to Georgia regulation, and is not covered by the Georgia Insurers Insolvency Pool. Obtain a signed acknowledgment.
Tax and records
- Georgia taxes surplus lines at 4% of gross premiums, collected by the broker and remitted with the annual report; the broker is personally liable for the tax.
- Keep placement records for at least five years.
- For multistate commercial risks, NRRA gives taxing authority to the insured's home state, not every state where the risk sits.
Worked example
A Georgia broker seeks $5 million commercial property coverage. Three authorized insurers decline in writing; one would write only $2 million. An eligible nonadmitted insurer quotes the full $5 million at a $20,000 premium. The broker documents the three declinations and the limited quote, binds coverage, delivers the nonadmitted-insurer disclosure with a signed acknowledgment, collects $800 tax (4% of $20,000), and retains the file. If instead an admitted insurer offered the full $5 million at $25,000, the placement would be improper no matter how much cheaper the surplus lines quote was.
Traps that cost marks
- Confusing an agent/broker license with surplus lines authority.
- Using a broker's own quote request as a "declination" with no insurer response.
- Placing with an unlisted nonadmitted insurer.
- Skipping the written disclosure or implying guaranty-fund protection.
- Treating the 4% tax as optional or computing it on net rather than gross premium.
- Ignoring NRRA home-state tax allocation on multistate risks.