SURPLUS LINES FAQ - Delaware Insurance Commissioner

36. In Part 2 of the annual tax return we provide information about the State Support of Fire Companies,
but the form says this is not a tax. Can you please tell me why we provide this information to you?
This section of the form is used to report what is generally referred to as “Fire Tax” because the
premium amounts stated on these reports are used to calculate the amount of State support for
volunteer fire departments. Fire Tax is not actually a “tax”, but rather a “break-down by lines
and location” report.
On the premium tax report, a company must report ALL insurance business written in Delaware
by the broker during the previous calendar year. But the Fire Tax Report assembles separate
data only on property/casualty lines of business and breaks down the premiums based on the
location of risks: City of Wilmington, New Castle County, Kent County, and Sussex County,
respectively.
Based on the reported Fire Tax figures, a specified percentage of the funds collected through
premium taxes is then disbursed to volunteer fire departments throughout the State, and to the
City of Wilmington in accordance with 18 Del. C., §705(b).
IMPORTANT: The information requested in Part 2 of the annual tax report is required by law.
If Part 2 of the form is not completed, the tax return will be considered incomplete will not be
accepted. The tax report will be returned to the broker for completion and the broker will be
subject to the Late or Incomplete Filing Penalty.
37. If we have a credit due in one quarter on return premiums, should we carry it over to the next
quarter? For example, in the 2nd quarter we had a credit due to us, but in the 3rd quarter we owe tax.
Should we apply the credit to the 3rd quarter amount and pay the difference, or should we pay the entire
3rd quarter amount and wait for the refund to come later?
You may apply the credit to the third quarter amount and pay the difference, but you must make
a note of it on the third quarter SL-1917 form showing that it is a credit from the second quarter.
Please note that you may not carry a credit from year to year. When you file the annual SL-
1916 form you will report all the premiums written during the year, as well as all the return
premiums, and if there is a credit at year-end the Department will issue a refund check.
38. We are normally a wholesaler and receive our business through a retail broker. We now have a case
in which we are the Retailer and the SL Broker. What forms are required and what do we have to file
with the Department when we place this business?
First, you need to complete the SL-1904 listing the declinations that show that a diligent effort
was made to place the risk in the admitted market. This form gets placed in your files. Do not
send it to the Department.
After the coverage is placed, submit the SL-1905 Notice of Insurance Transaction Form as an
email attachment in Excel format. This form must be submitted within 30 days after the policy
effective date. Do not send the SL-1905 in paper or PDF format and do not attach anything to it.
You will pay the tax on the policy when you submit the next quarterly SL-1917.