Skip To The Main Content

Broker/Other Fees

Should the premium taxes apply to fees, such as broker fees, inspection fees, and policy fees?

A:
The CDI has directed that all charges imposed or required by the surplus line insurer, whether labeled as premium, inspection fees, policy fees, or any other name, constitute taxable premium. For additional information on fees, refer to SLA bulletin #1371.

What type of fees are subject surplus lines taxes?

A:

Please refer to Bulletin #1371 which references CDI's Bulletin 80-6.

CDI has confirmed that this Bulletin is still applicable. Essentially, the entire cost to the policyholder arising out of the issuance and performance of the insurance contract constitutes taxable premium. We suggest you review the principles set forth in the Bulletin with your legal and compliance team.

How should tax calculation of the gross premium and fees be shown on the actual document in the filing?

A:
If the state taxes and stamping fees are calculated on the pure premium plus policy/inspection and/or other fees, the taxable premium would be the total of the gross premium and the fees.

If the state taxes and stamping fees are based on the gross premium plus fees, how should it be shown on the adding machine tape or cover note?

A:
If state taxes and stamping fees are based on premium plus fees, the broker should list the total of both as one amount on the adding machine tape or the cover note. The broker should not list the gross premium as one amount and the fees as a separate amount.