The Hawaii surplus lines tax is 4.68% of gross premiums, charged under HRS §431:8-315 whenever coverage is placed with a non-admitted insurer and Hawaii is the insured’s home state. The licensed surplus lines broker who arranges the placement normally calculates, collects, and remits the tax. A person who buys coverage directly from a non-admitted insurer with no broker involved takes on that obligation themselves.1Justia. Hawaii Code 431:8-315 – Tax on Surplus Lines
What the 4.68% Applies To
The rate applies to gross premiums minus any return premiums for canceled or adjusted policies. “Gross premiums” means what the insurer charges for the coverage itself. Fees the broker adds on, such as policy issuance charges, surveys, or inspections, are excluded from the taxable base.1Justia. Hawaii Code 431:8-315 – Tax on Surplus Lines
This is where errors tend to show up. Lumping service fees into the premium overpays the tax; leaving part of the insurer’s actual charge out underpays it. Separate the insurer’s coverage premium from every other line on the invoice, then multiply by 0.0468.
Return premiums from a cancellation or reduction can offset the original gross premium, but the Hawaii Insurance Division will only credit them if the filing includes copies of the original tax filing with the relevant policies marked, plus the return premium invoices or endorsements. A filing without that paperwork is treated as incomplete, and if the complete package arrives after the deadline, late-filing penalties can follow.2Department of Commerce and Consumer Affairs. Surplus Lines Tax
Who Owes the Tax and When
Brokers: Quarterly, Within 45 Days
The licensed surplus lines broker carries the primary obligation. Within 45 days after the end of each calendar quarter, the broker pays the premium tax to the director of finance through the insurance commissioner. In practice, that means Q1 is due around mid-May, Q2 around mid-August, Q3 around mid-November, and Q4 around mid-February.1Justia. Hawaii Code 431:8-315 – Tax on Surplus Lines
Independently Procured Coverage: Within 60 Days
When a Hawaii resident obtains coverage directly from a non-admitted insurer without using a surplus lines broker, HRS §431:8-205 shifts the tax to the insured. The rate is still 4.68% of gross premiums less return premiums, but the filing deadline is different: a written report must reach the commissioner within 60 days of procuring, continuing, or renewing the coverage.3Hawaii.gov. Independently Procured Surplus Lines
The report must include the names and addresses of the insured and the insurer, a description of the coverage and what it insures, the premium amount, and anything else the commissioner asks for. If the policy covers risks only partly located in Hawaii, the tax applies only to the portion of the premium tied to the Hawaii-based risk.3Hawaii.gov. Independently Procured Surplus Lines
Filing Through OPTins
Hawaii requires surplus lines filings and payments through the NAIC’s Online Premium Tax for Insurance system (OPTins), not through the state’s general Hawaii Tax Online portal. The surplus lines tax forms, designated Forms_104, exist only inside OPTins.2Department of Commerce and Consumer Affairs. Surplus Lines Tax
OPTins lets users upload state-specific forms, enter the fees, and pay by electronic funds transfer. The system has no licensing fee and no special software requirement, but a broker has to complete implementation paperwork with the NAIC before the first filing. Start that process well ahead of a quarterly deadline.4NAIC. Online Premium Tax for Insurance
Penalties for Missing the Deadline
Under HRS §431:8-316, a broker who fails to file the required statements or remit the tax on time can be fined up to $25 for every day the delinquency continues. The commissioner can also collect the unpaid tax by distraint or by filing a court action to recover both the tax and the accumulated fines.5Justia. Hawaii Code 431:8-316 – Penalty for Failure to File Statement or Remit Tax
For independently procured coverage, there is no per-day fine. Instead, delinquent taxes under HRS §431:8-205 accrue interest at 10% per year. On a sizable commercial premium, that adds up quickly, so the 60-day window is worth treating as a hard deadline.3Hawaii.gov. Independently Procured Surplus Lines
When the Hawaii Tax Applies at All
Hawaii’s framework sits inside the federal Nonadmitted and Reinsurance Reform Act, which gives only the insured’s home state the authority to regulate and tax a surplus lines transaction. For a business, the home state is the principal place of business. For an individual, it is the state of principal residence.6Office of the Law Revision Counsel. United States Code Title 15 Section 8206 – Definitions
If an insured based in Hawaii carries a multi-state risk, the full 4.68% applies to 100% of the premium, even if some of the covered property is elsewhere. The reverse also holds: when the home state is somewhere other than Hawaii, Hawaii cannot collect any portion of the tax, even on property located in the state. The statute conditions the tax on Hawaii being “the home state of the insured” for exactly this reason.1Justia. Hawaii Code 431:8-315 – Tax on Surplus Lines
Diligent Search Before Placement
Before placing coverage with a non-admitted insurer, a broker has to confirm the full amount or type of insurance is not available from admitted carriers in Hawaii. HRS §431:8-301 requires a diligent search among authorized insurers actually writing that kind and class of insurance in the state, and the search must happen each time coverage is placed or renewed, not just on initial placement.7Justia. Hawaii Code 431:8-301 – Insurance Placed With Unauthorized Insurers
One exception: when the insured qualifies as an “exempt commercial purchaser,” the broker can skip the diligent search, provided the broker discloses that admitted-market coverage may offer greater regulatory protection and the purchaser requests the surplus lines placement in writing.7Justia. Hawaii Code 431:8-301 – Insurance Placed With Unauthorized Insurers
Records a Broker Must Keep
Every surplus lines broker licensed in Hawaii must keep a full record of each surplus lines contract at an office in the state. The record has to include a copy of the policy or other evidence of insurance, along with the amount and perils insured, a description and location of the insured property, the gross premium, taxes and fees charged, any return premiums, the effective date and terms, and the insured’s name, address, and home state.8Justia. Hawaii Code 431:8-312 – Records of Surplus Lines Broker
A written statement documenting the diligent search for each contract has to be kept as well. All of these records must stay available for examination by the commissioner, without notice, for at least five years after the contract terminates.8Justia. Hawaii Code 431:8-312 – Records of Surplus Lines Broker