K.S.A. 40-246b, et seq., governs the sale of surplus/excess lines to Kansas insureds. A licensed surplus lines insurance producer may negotiate the sale of property and casualty insurance to insureds who reside or are domiciled in Kansas which is sold by insurance companies that are not authorized to do business in Kansas. The requirements for the licensing of resident and nonresident excess lines insurance producers are set forth in K.S.A. 246b(a) and statutes set forth therein, including K.S.A. 40-4902, 40-4903 and 40-4906(d). Persons interested in being licensed with the authority to sell surplus/excess lines in Kansas should review these statutes, as well as K.A.R. 40-8-2 through K.A.R. 40-8-11.
To apply for a Kansas surplus lines license, you must satisfy or complete the following requirements:
- Submit a NAIC Uniform Application for Individual Insurance Producer License via the National Insurance Producer Registry (NIPR).
- At the time you apply, you must pay an initial license fee of $50 by credit card or electronic check through NIPR.
- You must hold a property and casualty insurance producer license.
- Non-resident surplus lines applicants must also have an surplus lines license in their home state.
Surplus lines producers are required to renew their license on or before May 1st of each year. To renew their license, surplus lines producers must submit or complete the following:
- Your Surplus Lines Reporting Form and taxes due (which are due March 1st of each year). If the form (and taxes due, if any) is not submitted prior to your renewal date, your surplus lines license will not be renewed. See the section “Surplus Lines Reporting and Taxes” below for information on filing this report.
- A renewal application through the National Insurance Producer Registry (NIPR) at nipr.com, and pay the renewal fee of $50. Contact information, including a current email address, must be up to date. Contact changes must be reported via a Contact Change Request (CCR) through NIPR. Do not notify the Department directly of these changes. This information will need to be updated prior to submitting the renewal application.
Failure to complete the above requirements on or before March 1st will result in the non-renewal of your surplus lines license. There is no late renewal or grace period. To obtain a new surplus lines license, you will be required to reapply for a license through NIPR.
Surplus Lines Reporting and Taxes
On or before March 1st of each year, Kansas surplus lines producers are required to file an affidavit (pursuant to K.S.A. 40-246b(b) and K.A.R. 40-8-7). Surplus lines producers must also file the annual tax report and pay the annual tax remittance pursuant to K.S.A. 40-246c.
Kansas surplus lines producers are required to file reporting forms and pay the required taxes electronically via the Surplus Lines Tax Filing System. The Department will no longer accept paper checks for surplus lines taxes. If you do not already have an account, follow the link above and get a password. After logging in, report policies and premiums, file your required statement, and pay any owed taxes.
When you log into the Surplus Lines Tax Filing System, you will find a link for Statement & PRF Instructions which contains detailed instructions for filing the required statement and tax reports.
The codes for transactions required to be reported on the Statement can be found Coverage and Transaction Type Codes.
Contact the Department’s Rate and Form Division at 785-296-7844 or via email at KID.ExLines@ks.gov for questions on Surplus Lines reporting and tax filing requirements.
Statement of Insured: Pursuant to K.S.A. 40-246b(b), a surplus lines producer must provide certain disclosures to insured for whom the producer is obtaining surplus/excess lines coverage and to obtain the written consent of the prospective insured in a form promulgated by the Department. The Statement of Insured form has been developed for this purpose. A signed copy of this form should be retained in insured’s file. The forms must also be made available for inspection by the Department.
Surplus Lines Companies: Surplus lines policies can only be written by companies that are listed in Kansas as a non-admitted surplus lines carrier. Pursuant to K.S.A. 40-246e, the Commissioner maintains a list of insurers not authorized to do business in this state for review by any interested person. No surplus lines agent shall place insurance on a Kansas domiciled risk with an insurer whose name does not appear on this list: Listed Surplus Lines Companies, Syndicates.
Diligent Search Requirement; Prohibitions, Exceptions: Pursuant to K.S.A. 40-246b, coverage can only be placed in the non-admitted market if a diligent search has determined the inability to procure the insurance from an insurer authorized to do business in Kansas. Mere rate differential shall not be grounds for placing a particular risk in a non-admitted carrier when an admitted carrier would accept such risk at a different rate.
Based on this language, the Department has determined that surplus lines licensees are precluded from writing coverage eligible through the FAIR Plan, Kansas Automobile Insurance Plan, Kansas Health Care Provider Insurance Availability Plan and the Workers’ Compensation Insurance Plan, as each of these types of coverage is available in the admitted market. In the event an insured is declined in writing by one of the above plans, coverage could be placed in the non-admitted market. However, the agent should contact the Rate and Form Division via email to KID.ExLines@ks.gov to determine if any other statutory prohibitions might apply.
Exception to Diligent Search Requirement: Insureds who are “Exempt Commercial Purchasers” (defined in K.S.A. 40-246i[a]) are exempt from the diligent search requirement. However, all other requirements apply.
Policy Stamp or Endorsement; Signature of Producer: Any policy issued under K.S.A. 40-246b must have the following statement stamped or endorsed on it in a prominent manner:
This policy is issued by an insurer not authorized to do business in Kansas and, as such, the form, financial condition and rates are not subject to review by the commissioner of insurance and the insured is not protected by any guaranty fund.”
Each insurance contract shall bear the signature of the agent who placed the coverage with a non-admitted insurer. Copies of the stamped/endorsed and signature page(s) are to be retained in insured’s file.
Records to be Retained by Agents: Refer to K.A.R. 40-8-11 for records to be retained by agents and available for inspection by the Department.