This page is intended for retail producers who may have questions regarding surplus lines insurance in Colorado. Please contact us with any questions 303-681-4924.
Legislative information
Non admitted insurance is controlled by Article V of the insurance code and Regulation 2-4-1. Both documents are available in the Legislative section.
Courtesy Filings
Courtesy filings refers to the practice of a retail producer placing insurance directly with a non admitted insurer and then requesting a surplus lines broker to report the transaction under their surplus lines authority. Courtesy filings are prohibited in Colorado and only surplus lines brokers can procure insurance from an eligible non admitted insurer.
Due Diligence
Colorado does not publish an export list of risks that are automatically exportable to the non admitted market
In most circumstances the retail broker will be responsible for determining that there is not an admitted market willing to accept the risk of their client. the diligent search must be made from insurers actually transacting that class of business.
Due Diligence must be conducted at every renewal
Commercially Exempt Policyholders are exempt from the due diligence search
In the majority of situations a minimum of 3 declinations is required before a risk may be placed in the non admitted market. However if there are less than 3 markets then a search of the lesser number is required. The Colorado Division of Insurance has determined that accessing available markets does not meet the criteria established if the number is less than 3.
Colorado requires that an affidavit be completed for each transaction. It is the responsibility of the surplus lines broker negotiating the contract to sign the affidavit.
Surplus Lines Tax.
The surplus lines tax is 3% calculated on the gross premium and all policy fees including fees charged by wholesale brokers. Retail producers may only charge policy fees under certain circumstances. ( See Regulation 1-2-9 in Legislative section)
Tax exempt entities
Effective 8/20/2014 Colorado exempted property and exposures of Native American tribes located on Indian reservations from surplus lines tax. Property and exposures located elsewhere are taxable.
Non profit organizations are not exempt from surplus lines tax.
Placement based upon premium
Colorado permits the placement of a risk into the non admitted market based upon a lesser price provided:
- the premium differential is 10% or greater and
- the terms and conditions provided by the non admitted insurer are the same (or better) than that proposed by the admitted insurer.
