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New Jersey Surplus Lines study materials
New Jersey Surplus Lines study resources

New Jersey Surplus Lines: Duties and Responsibilities of the Surplus Lines Producer

New Jersey Surplus Lines · Work through your exam, one topic at a time.

All guide sections

Duties and Responsibilities of the Surplus Lines Producer

The producer's role

The surplus lines producer is the accountable intermediary for a lawful nonadmitted placement. The producer must be licensed, verify eligibility, document the search, disclose the insurer's status, handle premium as fiduciary funds, and remit tax and reports. The producer cannot delegate these duties to the insured or the insurer.

Specific New Jersey duties

  • Maintain records of the diligent search, declinations, policy documents, disclosure, and proof of the insurer's eligibility at placement. Retain records for the required period and make them available to DOBI.
  • Hold premium in a fiduciary account. Do not use collected premium for agency expenses before remitting tax or paying the insurer.
  • Remit the 5% surplus lines premium tax and file the annual report by March 1 for the prior calendar year.
  • Deliver written disclosure before placement that the insurer is not admitted and that guaranty fund protection differs from the admitted market.
  • Check the DOBI eligible insurer list at the time of placement; eligibility can change.
  • Cooperate with market conduct examinations and claims inquiries.

Worked example

A producer collects a $10,000 premium for a New Jersey home-state risk placed with an eligible surplus lines insurer. The producer must hold the funds in trust, remit $500 in premium tax, pay the insurer, and file the annual report by March 1. The producer also retains the three declinations and the signed disclosure. Using $2,000 of the premium to cover agency payroll before remitting the tax breaches the fiduciary duty.

Traps that cost marks

A generic signed form does not prove the required disclosure. A commission taken before tax remittance is a fiduciary problem. Placing with an insurer whose eligibility lapsed is the producer's error, not the insured's. “The insurer handles the tax” is false when New Jersey law places the duty on the producer.

Exam focus

Know the order: verify, search, disclose, place, hold funds, remit, file, retain.