Indiana Surplus Lines cheat sheet

Indiana's surplus lines framework is codified in IC 27-5-5 and administered by the Indiana Department of Insurance.

A surplus lines placement requires a current Indiana surplus lines producer license; an ordinary property and casualty license alone is not sufficient.

The placing insurer must be an eligible nonadmitted insurer; an insurer holding an Indiana certificate of authority is not a surplus lines insurer.

Surplus lines insurers are not members of the Indiana insurance guaranty association, so guaranty-fund protection does not apply.

The commissioner may adopt rules, prescribe forms, examine records, and impose penalties for surplus lines violations.

For multistate risks, the NRRA home-state rule generally determines which state's premium tax, eligibility, and diligence rules apply.

Surplus lines policies are not subject to Indiana rate and form filing approval before use.

Placing coverage with an unauthorized insurer without satisfying surplus lines law is an unlawful placement.

Decision rule: surplus lines placement is permitted only after authorized Indiana insurers decline the risk or cannot provide the requested coverage, terms, or capacity.

The diligent search must be documented before the surplus lines policy is bound.

The file should identify the authorized insurers contacted and record each declination or inability to write the risk.

If an authorized insurer will write the risk on substantially the same terms and conditions, surplus lines placement is not permitted.

An exempt commercial purchaser may allow waiver of diligent search when the statutory definition and notice requirements are met.

Coverages on Indiana's export list may be placed with eligible surplus lines insurers without a full diligent search.

Diligent search records must be retained with the policy and premium records for the required retention period.

A missing or inadequate diligent search can subject the producer to regulatory penalties and undermine the placement.

A separate Indiana surplus lines producer license is required in addition to property and casualty producer authority.

A nonresident producer may qualify through a home-state surplus lines license when reciprocity and Indiana requirements are satisfied.

Before placement and at renewal, the producer must confirm that the insurer is eligible in Indiana and authorized for the line in its domiciliary jurisdiction.

Required records include the policy, premium and tax data, evidence of insurer eligibility, diligent search documentation, disclosures, and proof of filing or payment.

Indiana requires surplus lines records to be retained for the statutory period, generally five years.

The producer must file required surplus lines reports and remit premium tax timely.

The producer must cooperate with Indiana Department of Insurance examinations and produce records on request.

Licensee violations can result in fines, license suspension, license revocation, or other commissioner action.

Indiana surplus lines premium tax is computed on gross surplus lines premium at the statutory rate, currently 3%.

The tax is remitted with the periodic surplus lines report on forms and schedules prescribed by the Indiana Department of Insurance.

A stamping or filing fee, if charged by a surplus lines association or stamping office, is separate from premium tax and must be disclosed.

Cancellations and return premiums reduce taxable premium to the actual earned premium for the coverage period.

For multistate policies, premium is allocated among states and, under NRRA, tax is generally remitted to the insured's home state.

Late reports, late tax payments, or underpayments can trigger penalties and interest.

The producer must retain proof of each surplus lines filing and tax payment.

Premium tax and separately stated fees must not be misrepresented to the insured.

An eligible surplus lines insurer must be authorized in its domiciliary jurisdiction to write the same line or class of insurance.

The insurer must meet Indiana capital, surplus, solvency, and good-standing standards.

The commissioner maintains eligibility oversight and may suspend or remove an insurer from the eligible list.

An alien surplus lines insurer must satisfy Indiana and NAIC eligibility requirements, including domiciliary regulation and accepted database listing where required.

Indiana's export list identifies coverages or classes that may be placed without a full diligent search.

Eligibility must be checked at placement and at each renewal.

Using an ineligible insurer for a surplus lines placement violates Indiana surplus lines law.

An insurer's eligibility does not make it an admitted insurer or provide guaranty association coverage.

Before placement, the producer must give the insured written notice that the insurer is not admitted in Indiana.

The notice must state that the surplus lines insurer is not covered by the Indiana insurance guaranty association.

The producer must retain evidence that the insured received and acknowledged the surplus lines disclosure.

The insured must be informed that the policy is not subject to Indiana rate and form filing approval.

Separately stated fees, commissions, taxes, and other charges must be disclosed and not misrepresented.

Indiana unfair trade practice prohibitions apply to surplus lines transactions, including misrepresentation and false advertising.

The policy or contract must be delivered promptly and must not create a false impression that the insurer is state-authorized.