In terms of nuclear coverage, who pays the premium tax?

In the context of nuclear coverage, the unauthorized insurer is responsible for paying the premium tax. This is significant because surplus lines insurance, including nuclear coverage, typically involves insurers that are not licensed in the state where the policyholder is located. As such, these unauthorized insurers are subject to specific regulatory requirements, including the obligation to pay premium taxes for the coverage they provide.

This regulation is intended to ensure that surplus lines insurers contribute to the state's insurance revenue, even though they do not hold a traditional license. The intent behind imposing the premium tax on unauthorized insurers helps maintain a level playing field between licensed insurers and those operating in the surplus lines arena. It also ensures that the state can monitor and regulate the activities of these insurers, which may present different risks compared to authorized insurers.

Understanding this aspect is crucial for compliance and operational considerations for brokers working within the surplus lines market, especially regarding their responsibilities and the obligations of unauthorized insurers.