Department of Labor and Regulation

Title - Division of Insurance email the Division of Insurance

Surplus Line Broker Information

Anyone writing business through insurance companies not licensed in South Dakota including Risk Purchasing Groups and Risk Retention Groups is required to have a Surplus Lines Broker license. The information listed below outlines, briefly, the requirements and information for a license, and some of the procedures and rules to follow.

Surplus Lines Broker Eligibility

Only licensed producers are eligible to be licensed as Surplus Lines Brokers. Both residents and non-residents are eligible for a Surplus Lines Broker license.

Submit for Licensing:

  1. Application — Apply online at Sircon.
  2. $2,000 Bond (Only required of resident surplus lines brokers.)
  3. $50 License Fee — Pay with Sircon when applying for or renewing license.

It is the responsibility of the Surplus Lines Broker to ascertain the financial responsibility and stability of any company with whom any business is placed. South Dakota Codified Law (SDCL) 58-32-23.

Each policy written by a Surplus Lines Broker must be stamped, in at least 10-point print or larger boldface type, the following (per SDCL 58-32-32): "This insurance contract is issued by a nonadmitted insurer which is not licensed by nor under the jurisdiction of the South Dakota Insurance Director."

If the policy written by the Surplus Lines Broker is placed with a risk retention group or written through a risk purchasing group the following statement must be in at least ten-point or larger boldface print on the front page and the declaration page (per SDCL 58-6A-9): "This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group."

A Surplus Lines Broker writing policies with a risk retention group or risk purchasing group is restricted to solicitation of commercial liability insurance only to risk purchasing group and risk retention group members located in South Dakota. (SDCL 58-6A-1)

At the time the policy is issued, the broker shall execute an affidavit on a form prescribed by the Director, setting forth facts regarding the insurance written. The Surplus Lines Broker shall file the affidavit with the Director of Insurance within thirty (30) days after the insurance is so procured. (SDCL 58-32-20)

Each Surplus Lines Broker shall file a verified statement of all surplus lines insurance transacted by him/her along with tax on the gross premium during the preceding calendar year with the Director of Insurance before the first day of April each year. The tax is on the gross premium at a rate of 2.5%, plus half of 1% on fire business. (SDCL 58-32-41)

SDCL 58-32-44 states, "If in any prior calendar year a broker collects and remits in excess of five thousand dollars ($5,000) of surplus lines premium tax, he shall in the following year remit the tax on a quarterly basis."

SDCL 58-32-46 states, "If any broker fails to file his annual statement, or fails to remit the tax provided by SDCL 58-32-44 prior to the first day of April, he shall be liable for a fine of $25 for each day of delinquency commencing with the first day of April."

SDCL 10-44-16 states, "All taxes and installments not paid when due shall be paid together with a penalty assessment on the unpaid balance at the rate of one and one-half percent per month, or fraction thereof.

SDCL 58-32-38 states, "An unauthorized insurer issuing such policy shall be deemed thereby to have authorized service of process against it in the manner and the effect as provided in SDCL 58-32-37. Any such policy shall contain a provision stating the substance of SDCL 58-32-36 to 58-32-38, inclusive, and designating the person to whom the director shall mail process provided in SDCL 58-32-37."

The onus is on the Surplus Lines Broker to satisfy himself that the non-admitted company is financially solvent and meets the eligibility requirements of SDCL 58-32-22.

If you have questions, contact Producer Licensing at the South Dakota Division of Insurance.

Contact Us

445 East Capitol Avenue
Pierre, SD 57501
Phone: 605.773.3563
Fax: 605.773.5369
email


Division of Insurance
445 E. Capitol Avenue
Pierre, SD 57501
Tel. 605.773.3563
Fax. 605.773.5369