An eligible surplus lines insurer must maintain capital and surplus of at least how much?

• A. $5 million
• B. $10 million
• C. $15 million
• D. $20 million

Answer: (C)

In surplus lines insurance, regulators require a solid financial cushion to protect policyholders because these lines cover higher-risk, harder-to-place risks. The capital and surplus figure is a measure of the insurer’s net worth—assets minus liabilities plus any paid-in capital and retained earnings. Requiring a minimum shows the state that the company has enough financial strength to pay claims even in volatile markets.

The mandated minimum for an eligible surplus lines insurer is fifteen million dollars. This threshold is higher than the smaller amounts in the other options to ensure a meaningful buffer against large or unexpected losses. If an insurer didn’t meet this level, it wouldn’t qualify as eligible to write surplus lines in that jurisdiction, since the aim is to maintain financial stability and protect insureds.

The other numbers aren’t the regulatory minimum for eligible surplus lines insurers, so they wouldn’t meet the statutory requirement.