Ohio Surplus Lines Tax: 5% Rate, Filing, and March 31 Deadline

The Ohio surplus lines tax is a 5% levy on the gross premiums charged for insurance placed with carriers that are not licensed in Ohio, authorized by Ohio Revised Code 3905.36. It applies both to policies arranged through a licensed surplus lines broker and to coverage a business or individual obtains directly from an unauthorized insurer. Returns are filed annually, and the deadline is March 31.¹

How the 5% Is Calculated

The tax equals 5% of gross premiums, less any return premiums. A return premium is the refund you receive if a policy is canceled early or adjusted downward mid-term, and that amount comes out of the base before you multiply by the rate.¹

The statute does not carve out policy fees, inspection charges, or service fees from the taxable premium the way some other states do. Treat the full premium your insurer charges as the taxable figure unless you have a specific written basis to exclude a component.

Who Pays: Broker Placements vs. Direct Procurement

Responsibility for the tax depends on how the coverage was placed.

When a licensed Ohio surplus lines broker arranges the policy, the broker collects the 5% from the insured at policy delivery and remits it to the state along with a report of every policy placed during the prior calendar year.²

When a business or individual contracts directly with an unauthorized insurer without going through a broker, that’s independent procurement. The insured owes the tax and files it themselves. Both the report and the payment are due annually by March 31 for the prior calendar year.¹

When Ohio Is the State That Collects

Under the Nonadmitted and Reinsurance Reform Act of 2010, only the insured’s home state can require premium tax on a surplus lines policy. Every other state is preempted, even if some of the insured risk sits within its borders.³

Your home state is wherever your principal place of business sits, or your principal residence if you’re an individual. One exception applies: if 100% of the insured risk is located in a different state than your principal location, the state holding the greatest share of the taxable premium becomes the home state. For affiliated groups buying coverage under a single contract, the home state follows whichever member accounts for the largest share of premium.

When Ohio is the home state, the full premium is taxed at 5%, regardless of how the underlying risk is distributed across state lines. When Ohio is not the home state, Ohio collects nothing on that policy, even if some of the covered risk is in Ohio.

How Brokers File and Pay

Licensed brokers report through the Ohio Department of Insurance’s secured Surplus Lines and Risk Retention Groups Reporting application. You can enter policy data as business is written during the year rather than uploading everything in one batch at year-end. All transactions for the prior calendar year must be in the system before March 31. Once the data is complete, the application generates an invoice that you pay by ACH debit.⁴

If you had no surplus lines business during the year, there is no zero-filing requirement. You simply don’t file.⁴

The policy-level documentation is Form INS4024, the Surplus Lines Statement, which the broker completes for each placement as a record of the transaction.²

How Direct Procurers File and Pay

If you bought coverage from an unauthorized insurer without using a broker, you file Form INS4023, the Direct Procurement Statement, and mail it with a check or money order payable to “Treasurer, State of Ohio.” Electronic payment is not available for direct procurement filings.⁵

Form and payment go to one of two addresses:

By regular mail: Treasurer, State of Ohio, P.O. Box 163458, Columbus, OH 43216-3458
By overnight delivery: Treasurer, State of Ohio, 30 E. Broad Street, 9th Floor, Attn: Revenue Management, Columbus, OH 43215

The form asks for the insurer’s legal name, policy numbers, coverage dates, and the exact gross premium. The tax line follows the standard formula: gross premiums minus return premiums, multiplied by 5%.

The March 31 Deadline and What Late Costs

March 31 is the only annual filing date for both brokers and direct procurers. There is no quarterly or semi-annual obligation.⁴

Miss it and the tax carries a 25% penalty. On top of the penalty, interest accrues on the combined total of the tax plus penalty under ORC 5725.221, running from the original due date until the balance is paid. The postmark date does not count. Payment is considered made only when the Treasurer or Superintendent actually receives it.¹

There is one narrow waiver. The Superintendent of Insurance has discretion to waive the 25% penalty, and the interest on that penalty, for a first-time, inadvertent failure to pay on time. The filer must report the missed payment immediately upon discovering it and pay the outstanding tax right away. The waiver sits in the Superintendent’s sole discretion, so it is not something to plan around.¹

The Diligent Search Behind a Legitimate Placement

Before a broker can place a risk in the surplus lines market, Ohio law requires proof that the admitted market was tried first. A property and casualty licensed agent must contact at least five admitted insurers the agent represents and that customarily write the coverage type in question. If the agent represents fewer than five such carriers, contacting all of them satisfies the rule. Declinations from each carrier establish diligent search, and silence from an admitted insurer for ten days after initial contact may be treated as a declination.⁶

This step matters for the tax picture because a placement made without a valid diligent search may itself be improper, which can create complications with both the filing and the broker’s license standing.

1
Ohio Legislative Service Commission. Ohio Code 3905.36 – Taxing Firms Dealing With Unauthorized Foreign Insurers
2
Ohio Department of Insurance. Surplus Lines Statement
3
Office of the Law Revision Counsel. 15 USC Chapter 108 – State-Based Insurance Reform
4
Ohio Department of Insurance. General Information for Surplus Lines Agents and Brokers
5
Ohio Department of Insurance. Direct Procurement Statement of Premium Taxes for Insurance With Unauthorized Insurers
6
Ohio Legislative Service Commission. Ohio Code 3905.33 – Unauthorized Insurers