Surplus Line Broker Information
Anyone writing business through insurance companies not licensed in South Dakota including Risk Purchasing Groups and Risk Retention Groups is required to have a Surplus Lines Broker license. The information listed below outlines, briefly, the requirements and information for a license, and some of the procedures and rules to follow.
Surplus Lines Broker Eligibility
Only licensed producers are eligible to be licensed as Surplus Lines Brokers. Both residents and non-residents are eligible for a Surplus Lines Broker license.
Submit for Licensing:
It is the responsibility of the Surplus Lines Broker to ascertain the financial responsibility and stability of any company with whom any business is placed. South Dakota Codified Law (SDCL) 58-32-23.
Each policy written by a Surplus Lines Broker must be stamped, in at least 10-point print or larger boldface type, the following (per SDCL 58-32-32): "This insurance contract is issued by a nonadmitted insurer which is not licensed by nor under the jurisdiction of the South Dakota Insurance Director."
If the policy written by the Surplus Lines Broker is placed with a risk retention group or written through a risk purchasing group the following statement must be in at least ten-point or larger boldface print on the front page and the declaration page (per SDCL 58-6A-9): "This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group."
A Surplus Lines Broker writing policies with a risk retention group or risk purchasing group is restricted to solicitation of commercial liability insurance only to risk purchasing group and risk retention group members located in South Dakota. (SDCL 58-6A-1)
SDCL 10-44-16 states, "All taxes and installments not paid when due shall be paid together with a penalty assessment on the unpaid balance at the rate of one and one-half percent per month, or fraction thereof.
SDCL 58-32-38 states, "An unauthorized insurer issuing such policy shall be deemed thereby to have authorized service of process against it in the manner and the effect as provided in SDCL 58-32-37. Any such policy shall contain a provision stating the substance of SDCL 58-32-36 to 58-32-38, inclusive, and designating the person to whom the director shall mail process provided in SDCL 58-32-37."
The onus is on the Surplus Lines Broker to satisfy himself that the non-admitted company is financially solvent and meets the eligibility requirements of SDCL 58-32-22.
If you have questions, contact Producer Licensing at the South Dakota Division of Insurance.
124 S. Euclid Ave., 2nd Floor
Pierre, SD 57501