No. 42213 (Amendment): Section R590-157-4. Stamping Fee Amounts

(Amendment)

DAR File No.: 42213
Filed: 10/13/2017 02:27:23 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of the change is to fund technology improvements that will promote efficiencies between the Surplus Line Association and the surplus line producers and agencies. The Surplus Line Association acts as the agent for the Utah Insurance Commissioner pursuant to Section R590-157-5.

Summary of the rule or change:

The change increases the surplus line stamping fee to 0.18 of 1% from its current level of 0.15 of 1%.

Statutory or constitutional authorization for this rule:

• Section 31A-3-303
• Section 31A-2-201
• Section 31A-15-103

Anticipated cost or savings to:

the state budget:

There will be an approximate aggregate increase of $78,600 to the state budget as a result of this fee increase. These funds will be used to pay for technology improvements at the Surplus Line Association, which acts as the agent for the Utah Insurance Commissioner pursuant to Section R590-157-5.

local governments:

There is no anticipated cost or savings to local governments. This rule governs transactions that involve the state, the Surplus Line Association, and surplus line producers and agencies that operate within the state.

small businesses:

After researching the businesses that have insurance policies through non-admitted insurers, it was concluded that 90% of those businesses are small businesses and will be affected. This rule change will result in an average increase per policy of $3.26. This figure will be explained further in the Department head's comments below.

persons other than small businesses, businesses, or local governmental entities:

This fee change impacts all businesses that have insurance through non-admitted insurers. The approximate aggregate increase that comes as a result of the fee will be $78,600, which breaks down to an average increase per policy of $3.26.

Compliance costs for affected persons:

This fee change impacts all businesses that have insurance through non-admitted insurers. The approximate average increase per policy is $3.26.

Comments by the department head on the fiscal impact the rule may have on businesses:

I. WHETHER A FISCAL IMPACT TO BUSINESS IS EXPECTED AS A RESULT OF THE PROPOSED RULE AND, IF SO, A DESCRIPTION OF WHY: Businesses that have insurance through non-admitted insurers will be impacted. The approximate average increase per policy is $3.26. II. AN ESTIMATE OF THE TOTAL NUMBER OF BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: In 2016, 24,128 surplus line policies were issued in Utah, and that number is expected to remain roughly flat. It is assumed that each policy corresponds to one business in the state. III. AN ESTIMATE OF THE SMALL BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: Of the businesses stated above, approximately 90% are small businesses. This means that approximately 21,715 small businesses will be impacted. IV. A DESCRIPTION OF THE SOURCES OF COST OR SAVINGS AS WELL AS THE EXPECTED NET SAVINGS OR COST TO BUSINESS ESTABLISHMENTS AND SMALL BUSINESS ESTABLISHMENTS AS A RESULT OF THE PROPOSED RULE OVER A ONE-YEAR PERIOD, IDENTIFYING ONE-TIME AND ONGOING COSTS: In 2016, the surplus line market included 24,128 issued policies with a total premium of $262 million. At the current stamping fee of 0.15 of 1%, the annual aggregate stamping fee cost is $393,000 ($262M x .0015). Increasing the surplus line stamping fee to 0.18 of 1% will result in an annual aggregate cost of $471,600 ($262M x .0018). This corresponds to an annual aggregate cost increase to all businesses of approximately $78,600 ($471,600 to $393,000) and an annual aggregate cost increase to small businesses of approximately $70,740 (90% of $78,600). The average annual increase per policy, whether business or small business, will be $3.26 ($78,600 / 24,128). There are no one-time costs as a result of this rule change. V. DEPARTMENT HEAD'S COMMENTS ON THE ANALYSIS: This analysis represents the best analysis possible using data and resources from both the Utah Insurance Department and the Surplus Line Association.

Todd E. Kiser, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/01/2017

This rule may become effective on:

12/08/2017

Authorized by:

Steve Gooch, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-157. Surplus Lines Insurance Premium Tax and Stamping Fee.

R590-157-4. Stamping Fee Amounts.

A. The surplus lines stamping fee is [.15].18 of 1% of the policy premium payable for the examination of a surplus lines transaction as required in Subsection 31A-15-103(11)(d).

B. Late surplus lines stamping fee payments may be subject to late fees of 25% of the stamping fee due plus 1 1/2% per month from the time of default until full payment of the fee.

C. A courtesy filing fee is not included as surplus lines premium for the purpose of computing taxes and stamping fees.

 

KEY: insurance fee, taxes

Date of Enactment or Last Substantive Amendment: [November 18, 2008]2017

Notice of Continuation: January 7, 2013

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-3-303; 31A-15-103

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