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On September 25, 2017, the Georgia Department of Insurance released Bulletin 17-EX-1 reminding surplus lines insurers and brokers that it is unlawful to charge customers fees outside of premium in conjunction with the sale of surplus lines insurance in Georgia.
The Bulletin does not represent a change in any policy or guidance previously provided by the Department of Insurance or a change in Georgia law. The purpose of the Bulletin was to remind brokers of the requirements to include any fees in the premium of a surplus lines insurance policy.
The Department of Insurance permits surplus lines fees as long as they are:
1) authorized by the insurer;
2) included in premium for purposes of taxation;
3) and made a part of the policy and clearly indicated to the insured within the policy/declarations page.
- Georgia law requires licensed surplus line brokers to charge, collect and remit all premium taxes on the full amount of premium.
- Authorized by the insurer” means that the insurer has provided the broker with authorization to include a fee as part of the premium and that the insurer further understands that the broker will be collecting and retaining that fee (net of taxes), rather than remitting it to the insurer. This authorization is often included as part of the agency agreement between an insurer and a broker.
- “Made a part of the policy” may be demonstrated by clearly including the fees as line items of premium on the policy’s declaration page.
- “Made part of the premium” means that any fee included on the policy must be included in the premium on the declaration page and used for the calculating of surplus lines premium tax.
- Brokers are prohibited from writing in or adding fees to the policy, declaration page or any other means without authorization from the insurer.
- The prohibition on fees for surplus lines insurance occurs when fees are not authorized by an insurer and/or are not included in premium. Fees outside of premium are prohibited
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