1. Why is Oregon taxing Wet Marine & Transportation insurance written by nonadmitted/unauthorized insurers?
The 2019 Oregon Legislature passed HB 2787 which applies a tax of 3/4 of 1% (0.0075) of the gross premium on all non-admitted Wet Marine & Transportation insurance policies that the insurance producer places with unauthorized or non-admitted insurers if the insured home state is Oregon. The tax applies to policies issued or renewed on or after January 1, 2020. It is the responsibility of the insurance producer to collect the tax from their insured and file and pay the tax within 90 days of the effective date of the policy or premium bearing endorsement. The filing and payment of the tax must be done through the Oregon Surplus Line Association. Please see the related insurance code section for definitions of wet marine & transportation insurance and gross amount of premiums.
2. When does HB 2787 take effect?
The tax applies to policies issued or renewed on or after January 1, 2020.
3. Who collects the taxes and makes the filing?
Each producer that places Wet Marine and Transportation insurance with a nonadmitted insurer shall collect from the insured taxes in addition to the gross amount of premiums and other charges. The producer shall report on insurance transacted during the previous 90 days and the report shall accompany the payment of tax due. The report must show the gross premiums, or return premiums and the amount of the tax.
4. Why the Surplus Line Association of Oregon?
HB 2787 stipulates that the Director may require insurance producers to file the report on a form the Director specifies or on a form prescribed by the Surplus Line Association of Oregon. Further, HB 2787 stipulates that the Surplus Line Association of Oregon may charge producers a fee for reviewing Wet Marine and Transportation insurance policies and for collecting, on behalf of the State, the taxes imposed. The Surplus Line Association of Oregon is an advisory organization to the DCBS and has been in business for 80 years performing a similar role for the State for surplus lines insurance policies.
5. What is the fee being charged by the Surplus Line Association of Oregon for their service?
To process and handle Wet Marine and Transportation filings the Surplus Line Association of Oregon will charge a flat $100 for every premium-bearing new policy, renewal, and endorsement. The tax of ¾ of 1% (0.0075) applied to gross premium does not apply to the service charge.
6. How do I handle a Stock Throughput (STP) policy?
A STP policy that is written on wet marine forms and placed in the wet marine insurance marketplace should be handled within the new Wet Marine & Transportation tax effective January 1, 2020. If an excess policy over the STP is placed that covers storage risk and/or inland transit only, that policy should be handled as Surplus Lines.