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Excess & Surplus Lines Law in the United States – Annually updated manual available for purchase
Frequently Asked Questions
Taxability of Fees
The State of Ohio advised us that company fees are viewed just like premium and are taxable. Broker fees, program manager and underwriting manager fees are not taxable.
Exempt Commercial Purchaser Regulations
Section 3905.331 of the Ohio Revised Code addresses this issue.
Corporate Surplus Lines Licenses in Ohio
If commissions are paid to an individual, the individual must be surplus lines licensed and must file and pay taxes.
If commissions are paid to a business entity, the business entity must be surplus lines licensed and is responsible for all filings and taxes.
Questions and Answers
Does Ohio licensing statutes require an MGA/Broker employee who may be involved in assisting in the placement of an E&S insurance policy to hold a Surplus Lines license or is a license required only for the retail agent/person dealing directly with the applicant/insured?
Ohio Surplus Lines License statutes do NOT require an employee to also carry a surplus lines license. They must be property and casualty licensed. They also do NOT require the retail agent ot carry a surplus lines license since they are NOT acting in the capacity of a surplus lines broker. Ohio does require the agency to also carry a corporate surplus lines license besides the licensed surplus lines individual.
Are MGA fees and policy fees taxable for surplus lines
Broker fees are NOT taxable. Only carrier fees. This was clarified in the last update to the agent licensing statutes
Does Ohio allow surplus lines insurance be written on a primary basis for: Garage Liability (GL & Auto), Garage keepers, Dealers Physical Damage (Dealer Open Lot & Collision), and Commercial Property (Building & Contents)?
There are NOT any prohibitions to writing ANY of those coverages in the surplus lines market. The only thing that can NOT be written surplus lines is primary auto liability. This is NOT a regulation in the surplus lines statutes but has to do with all primary auto liability being required to be written with licensed (admitted) carriers since NO SURPLUS LINES CARRIERS are on the list of carriers that comply with meeting the Ohio Financial Responsibility regulations.
Are political subdivisions exempt from surplus tax?
|Yes. This section does not apply to: (7) A political subdivision or any combination or consortium of two or more political subdivisions. (D) As used in this section: (1) “Political subdivision” means any county; municipal corporation; township; township police district; township fire district; joint fire district; joint ambulance district; joint emergency medical services district; fire and ambulance district; joint recreation district; township waste disposal district; township road district; community college district; technical college district; detention facility district; a district organized under section 2151.65 of the Revised Code; a combined district organized under sections 2151.65 and 2152.41 of the Revised Code; a joint-county alcohol, drug addiction, and mental health service district; a drainage improvement district created under section 6131.52 of the Revised Code; a union cemetery district; a county school financing district; a city, local, exempted village, cooperative education, or joint vocational school district; or a regional student education district created under section 3313.83 of the Revised Code, any public division, district, commission, authority, department, board, officer, or institution of any one or more of those political subdivisions, that is entirely or substantially supported by public tax moneys. (2) “Municipal corporation” means all municipal corporations, including those that have adopted a charter under Article XVIII, Ohio Constitution.|
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