The Arkansas surplus lines tax is 4% of the direct premium written on coverage placed with a non-admitted carrier, collected by the broker from the policyholder and remitted quarterly to the Treasurer of State through the Insurance Commissioner. Filings run through the OPTins portal and are due within 60 days after the end of each calendar quarter. Miss the deadline and the fine is $50 per day until you catch up.1Justia. Arkansas Code 23-65-315 – Tax on Surplus Lines Brokers
How the 4% Is Calculated
The tax applies to direct premiums written, less return premiums, and excludes amounts collected to cover other state or federal taxes.1Justia. Arkansas Code 23-65-315 – Tax on Surplus Lines Brokers If a policy is canceled mid-term and part of the premium is refunded, the tax is figured on the net, not the original figure.
Every surplus lines policy issued in Arkansas must carry a conspicuous notice telling the insured that the 4% tax applies and that the Arkansas Property and Casualty Guaranty Act does not cover the policy.2Cornell Law Institute. 054.00.09 Arkansas Code R. 004 – Surplus Line Insurance
Quarterly Deadlines and OPTins Filing
Arkansas requires brokers to file and pay through OPTins, the state’s mandatory online portal, which replaced paper filings in January 2020.3Arkansas Insurance Department. Surplus Lines Brokers Filing The broker enters policy details and premium figures, and the system calculates the tax.
Returns are due within 60 days after the end of each calendar quarter in which coverage was placed. For 2026, that works out to:
- Q1 (January–March): June 1, 2026
- Q2 (April–June): August 31, 2026
- Q3 (July–September): November 30, 2026
- Q4 (October–December): March 1, 2027
Each quarterly filing uses Form SL-2, with an accompanying Form SL-2A for each insurer the broker placed business with that quarter.4Arkansas Insurance Department. 23 CAR 201 – Surplus Line Insurance Zero filings aren’t required for quarters with no activity. The annual return (Form SL-4) does require a zero filing if the broker had no business for the year.
Penalties for Late Filing or Payment
If a broker misses the quarterly statement deadline, the fine is $50 for every day the filing stays delinquent, starting on the due date. The same $50-per-day penalty applies to late tax remittance, running from the 61st day after the end of the month in which the coverage was procured.5Justia. Arkansas Code 23-65-316 – Penalty for Failure to File A single ignored quarter can rack up thousands in fines before the next one closes.
Diligent Search Before Placement
Before placing coverage with a non-admitted carrier, the broker has to show the coverage was genuinely unavailable in the admitted market. Specifically, the broker must demonstrate that the full amount of insurance needed could not be procured, after diligent effort, from authorized insurers actually marketing that type of coverage in Arkansas.6Justia. Arkansas Code 23-65-305 – Conditions of Surplus Lines Insurance If admitted carriers can write part of the risk, the surplus lines placement should pick up only the balance.
The search is documented on the Form SL-2 affidavit filed with the Insurance Commissioner within 60 days of the end of the month the coverage was procured.4Arkansas Insurance Department. 23 CAR 201 – Surplus Line Insurance The statute doesn’t set a minimum number of carriers to contact. The test is whether the broker approached those admitted insurers it had reason to believe were actually marketing that kind of coverage here. Written documentation must be kept.
One useful rule: if an admitted carrier offers similar coverage but quotes a premium more than 20% higher than the surplus lines option (including taxes and underwriting costs), the broker may treat that as a declination.7Arkansas Code of Rules. 23 CAR 201-103 – Affidavits Arkansas does not maintain an export list of coverages pre-approved for surplus lines placement, so the diligent-search process applies to every transaction.
When the Standard Rules Don’t Apply
Independently Procured Coverage
If an Arkansas business buys non-admitted coverage directly, without using a surplus lines broker, a different tax applies. The rate is 2% of the net premium, due within 30 days after the insurance is procured, continued, or renewed.8FindLaw. Arkansas Code Title 23 – 23-65-103 The insured withholds the tax from what it pays the carrier and remits it to the Treasurer of State through the Insurance Commissioner. The rate is lower, but the compliance burden sits with the policyholder.
Coverages Outside the Framework
Some kinds of insurance fall outside surplus lines rules entirely, so neither the 4% tax nor the diligent-search requirement applies. These include wet marine and foreign trade insurance, risks located entirely outside Arkansas, vehicles or aircraft principally garaged out of state, railroad operations in interstate commerce, and certain aviation coverages for manufacturers and scheduled interstate flights.
Multi-State Risks
When a policy covers risks in more than one state, the federal Nonadmitted and Reinsurance Reform Act controls which state collects the tax. Only the insured’s home state can require premium tax payments on non-admitted insurance.9Office of the Law Revision Counsel. 15 USC 8201-8204 Arkansas is the home state when the insured’s principal place of business, or principal residence for an individual, is here.10National Association of Insurance Commissioners. Nonadmitted Insurance Reform Sample Bulletin By default the full 4% goes to Arkansas without allocation among jurisdictions, though the Insurance Commissioner may enter into allocation agreements with other states that would limit the tax to the premium portion attributable to Arkansas risks.1Justia. Arkansas Code 23-65-315 – Tax on Surplus Lines Brokers Brokers with multi-state placements should check whether an active compact changes the calculation.
What Policyholders Give Up
The 4% tax and the required disclosure notice both exist partly to signal what surplus lines coverage is: insurance from a carrier the state does not license, backed by no state safety net. Surplus lines policies are explicitly excluded from the Arkansas Property and Casualty Insurance Guaranty Act.11Justia. Arkansas Code 23-65-320 – Domestic Surplus Lines Insurers If the carrier becomes insolvent, there is no state-backed fund to step in on your claims. With an admitted carrier, the guaranty association would cover at least a portion of outstanding claims. That protection is not available here, and the tax disclosure on the face of the policy is where that trade-off is spelled out.