What is the tax percentage for premium written in surplus lines insurance?

In the context of surplus lines insurance, the tax on premiums written is set at a rate of 2%. This percentage reflects the specific regulatory framework applied to surplus lines, which allows for the collection of taxes on premiums that are written by insurers not licensed in Michigan but are permitted to operate within the state under surplus lines conditions. The surplus lines market is typically utilized for covering unique or hard-to-place risks that standard insurers may not be willing to insure.

Understanding this tax rate is particularly important for agents and brokers dealing with surplus lines, as it ensures compliance with state regulations when they facilitate coverage for clients with specialized insurance needs. Moreover, recognizing the taxation framework around surplus lines aids agents in accurately calculating the total cost of insurance for clients, which is crucial for transparent and effective communication regarding policy pricing.