What is a requirement for an Alien Excess or Surplus Lines insurer?

An Alien Excess or Surplus Lines insurer is required to establish a U.S. Trust Fund of $5,400,000 in order to operate within the United States. This requirement serves as a financial security measure designed to protect policyholders and ensure that claims can be paid. The Trust Fund acts as a safeguard, demonstrating the insurer's financial stability and commitment to fulfilling its obligations to policyholders in the event of claims arising from lost or damaged property. This level of funding helps assure states that the carrier has sufficient resources to cover potential liabilities.

Establishing a domestic office in every state is not necessary for Alien insurers, as they can operate without physical offices in each location, leveraging the surplus lines framework. Registering all policies with the federal government is not required; instead, surplus lines transactions typically need to be reported to the appropriate state regulatory authorities. Lastly, obtaining a local agent license may be an operational requirement but does not directly pertain to the requirements of the insurer itself in terms of financial backing and security. Thus, the establishment of the Trust Fund is a key requirement for these types of insurers.