The Surplus Line Association of Oregon is responsible for reviewing all Oregon surplus line placements and assisting the State of Oregon in collecting premium taxes on Oregon surplus line placements. All surplus line policies must be filed with the Surplus Line Association on the forms provided by the Association. These forms permit review of the basic requirements and the calculation of the taxes for each placement. In order to file a policy with the Association, prospective filers must register with the Association and elect a filing basis type. The form for registering with the Association to permit filing of policies is available under the tab "Register with SLAOR" above.
A tax calculator tool is available on this web site to enable all interested parties to calculate taxes that would apply to an Oregon surplus line transaction. See the "Taxes and Charges Calculator" option on the pane to the left of this page. (The tax calculator is a tool only - it is not a filing mechanism.)
Filers may choose to file on a Bulk basis (high volume users - more than 40 records annually), or on an Item basis (low-volume users - no more than 40 records annually). Using web-assisted forms, both filing basis types prepare and submit both electronic records and hard documentation to the SLAOR office for review. "Bulk" basis filers are billed quarterly by the SLAOR for the taxes to be paid the State of Oregon and for the Surplus Line Service Charge. "Item" basis filers pay taxes and Surplus Line Service Charge with each individual record submitted. The SLAOR remits the taxes for "Item" basis filers to the State of Oregon. Filing basis type may be changed at the end of any calendar year.
When no transaction takes place in Oregon but the policy provides coverage on an Oregon location or other exposure, Oregon law permits a producer with an out-of-state surplus line license or others to report the Oregon portion of the premium and pay the appropriate taxes without an Oregon surplus line license. The Association will process such business for non-Oregon surplus line licensed producers on the "Item" basis, provided they register with the SLAOR.
Each filer receives specific instructions on how to file under the system they select when they register with SLAOR.
Surplus lines policies are subject to three additional charges, which are paid quarterly by "Bulk" basis filers, and with each individual submitted record by "Item" basis filers:
1. State of Oregon Premium Tax: 2% of premium and fees/charges.
2. State of Oregon Fire Marshal Tax: 1% of premium and fees/charges on that portion of the premium allocated to the peril of fire. Multi-peril policies have a specific pre-defined % of the policy assigned to the peril "fire" based on the class of coverage. See "FAQ's on Filing" tab at top of this page for the detail on multi-peril allocations. 3. The Surplus Line Service Charge (SLSC), a filing service charge due the Surplus Line Association, is a one-time, fully-earned charge of $5.00, billed with the initial policy premium (or the annual premium billing for multi-year policies). There is no additional or return service charge for subsequent endorsements on those policies during the term of the policies. (The only exception is that a full return of the $5.00 charge will be allowed in the event of a "flat" cancellation). This change will apply to policies filed under both the "Bulk" and "Item" Basis filing procedures. For "Bulk" filers, the annual aggregate minimum service charge iso $200. All policies with inception dates prior to October 1, 2006 will be processed under the previous service charge program; additional and/or return service charges will be incurred on all endorsements to such policies through the life of each policy, regardless of the effective date of those endorsements (see below for details). Rules for transactions on polices with inception dates prior to October 1, 2006: Surplus Line Service Charge (SLSC) due the Surplus Line Association of Oregon: 0.25% of all premium and fees/charges (always rounded to the nearest whole dollar). Minimum SLSC: "Item" Basis Filers are subject to a $25.00 minimum on each new or renewed policy and are subject to a $1.00 minimum on additional premium endorsements. "Bulk" Basis Filers are subject to a $1.00 minimum on each new or renewed policy and on additional premium endorsements, and are also subject to a $300 total annual SLSC minimum for all filings. For both filer types, SLSC is returned on return premium endorsements when it reaches a $3.00 minimum.
There are three components of mandatory "other" charges on Oregon policies: state premium taxes, state fire marshal taxes and surplus line service charges (SLSC) due the Surplus Line Association. They are:
1. State Premium Tax: 2% of the premium and any other policy fees/charges as a premium tax. Surplus Line Service Charges (SLSC) are not subject to State Premium Tax.
2. State Fire Marshal Tax: 1% of any premium and other policy fees/charges allocated to "fire" coverages as a Fire Marshal Tax (see "How do I calculate the Fire Marshal Tax?" for more details).
3. Surplus Line Service Charge (SLSC), a filing service charge due the Surplus Line Association, a one-time, fully-earned charge of $5.00, billed with the initial policy premium (or the annual premium billing for multi-year policies). There is no additional or return service charge for subsequent endorsements on those policies during the term of the policies. (The only exception is that a full return of the $5.00 charge will be allowed in the event of a "flat" cancellation). For "Bulk" filers, there is an annual aggregate minimum service charge is $200. All policies with inception dates prior to October 1, 2006 will be processed under the previous service charge program; additional and/or return service charges will be incurred on all endorsements to such policies through the life of each policy, regardless of the effective date of those endorsements see "filling procedures" for more details. The surplus line producer is responsible for collecting these taxes and other charges and remitting them appropriately. How do I calculate the fire marshal tax? It is usually not necessary for the user to calculate taxes as the SLAOR web filing system provided to "Bulk" and "Item" Basis filers automatically calculates the taxes. The user simply enters the coverage type and premium amount, and taxes and charges are automatically calculated. It is suggested that users utilize the "Taxes & Charges Calculator" available on this web site (see pane at left) when quoting surplus line business to avoid errors in calculating the fire marshal tax and other charges.
It is usually not necessary for the user to calculate taxes as the SLAOR web filing system provided to "Bulk" and "Item" Basis filers automatically calculates the taxes. The user simply enters the coverage type and premium amount, and taxes and charges are automatically calculated. It is suggested that users utilize the "Taxes & Charges Calculator" available on this web site (see pane at left) when quoting surplus line business to avoid errors in calculating the fire marshal tax and other charges.
The fire marshal tax is calculated as follows:
The tax is 1% of the fire portion of the premium (and related fees/charges). Fire premiums are pre-defined as:
100% of fire (all risk property, commercial, dwelling, fire, ecc, v&mm, fire fighting expenses)
65% of homeowners
20% of inland marine (floater, equipment, cargo, motor cargo, builders risk, construction equipment)
50% of multi-peril (commercial package policies)
8% of auto physical damage (comprehensive and collision)
8% of aviation hull (aircraft physical damage, ground & in flight, specified perils)
All other coverage types are exempt from the fire marshal tax.
Related fees/charges made by the Oregon surplus line licensee are not subject to fire marshal tax. All related fees/charges made by any other entity such as by an intermediary or by the insurer are subject to fire marshal tax at the same rate as the policy's coverage type which generates the lowest fire marshal tax rate.
If the terrorism peril is included in a policy with no separate premium charge, the premium will be reported and taxed under the classifications applying to perils for which there are premium allocations on the policy. If a separate premium allocation is made for the peril terrorism in the policy, the allocation shall be:
1. For third party policies, such as a liability policy with no property coverages, the terrorism premium is not subject to fire marshal tax and should be reported with the coverage type applying to the other liability coverages on the policy. If it is a stand-alone terrorism liability policy (no other coverage on the policy), it should be reported as a liability coverage.
2. For any first party property coverage or package policies where there is a separate charge for the terrorism peril, it should be proportionately allocated to the coverage types where terrorism protection is provided. For example, the terrorism premium on a package policy with liability, inland marine and fire coverage would be allocated proportionately to the liability, inland marine and fire coverages if the terrorism coverage applied to all three. If the terrorism coverage applied only to the inland marine and fire exposures but not the liability exposure, its premium would be allocated proportionately between the inland marine and fire coverages. If the coverages on a policy are reported as multi-peril coverages, the terrorism coverage, too, would be reported as multi-peril. The fire marshal tax on the terrorism premium is calculated as it is on the coverage type which is used to report the terrorism premium. If the first party terrorism coverage is on a stand-alone basis (no other perils insured on the policy) the premium shall be reported under the peril fire and be subject to fire marshal tax on the same basis as a fire policy.
Fees charged by surplus line insurance companies or intermediaries other than an Oregon licensed surplus lines producer are unregulated and may be charged. They are taxed as premiums, subject to both a premium and fire marshal tax. (For information on fire marshal tax on fees/charges, see "How do I calculate the fire marshal tax?" above). Oregon licensed surplus line producers may also charge reasonable fees associated with the transaction subject to the provisions of ORS 735.455. The principal requirements are that a written agreement stipulating the fee must be in place between the surplus line licensee and the insurance producer prior to the binding or issuance of the insurance. Similarly, the producing insurance producer must have an agreement in place with insured prior to the binding or issuance of insurance if he wishes to pass the charge on to the insured. Such charges are also considered premiums and are subject to taxation but not fire marshal tax. All fees and charges must be shown on the policy declaration page submitted to the Surplus Line Association of Oregon.
From this page, any organization or individual desiring to file the Oregon portion of the premium on any surplus line insurance policy covering exposures in Oregon may access the form to apply for filing registration with the Surplus Line Association of Oregon. Before completing the application form, make sure that you fall in either Category 1, Category 2, or Category 3 as follows:
Category 1: You, or the organization you represent, have secured an Oregon surplus line producer's license from the State of Oregon Insurance Division, and desire to be registered with the Surplus Line Association of Oregon so that you may make the filings required by Oregon statute on exposures in Oregon for which you arrange surplus line insurance, or
Category 2: You, or the organization you represent, are not licensed as an Oregon surplus line producer, but you are licensed as a surplus line producer in your state of residence. You write only incidental exposures in Oregon and you are confident that no transactions relating to the placement of the Oregon coverage have, or will, take place in Oregon. You desire to report and pay the Oregon taxes on the portion of your surplus line policy premiums allocated to Oregon exposures. You wish to be registered with the Association to make the statutory filings.
Category 3: You, or the organization you represent, are not licensed as an Oregon surplus line producer. You are confident that no transactions relating to the placement of the Oregon coverage have, or will, take place in Oregon. You desire to report and pay the Oregon taxes on the portion of your surplus line policy premiums allocated to Oregon exposures. You wish to be registered with the Association to make the filings. If both the individual and his or her organization are licensed, only one need be registered as a filer. In most cases, it would be appropriate to register the organization, assuming that the individual licensee will be transacting all of his or her business under the organization's name. An SLAOR Filing Registration application form is available below. Print the form, complete manually, and submit to the Surplus Line Association of Oregon.
SLAOR Registration Form